Cost Reduction Doesn’t Have to Be Painful

Opportunity for cost reduction exists in all companies. Lytica’s analytic tools were conceived to focus on cost reduction for commercial component purchases but are also proving effective in reducing overhead activity associated with their cost reduction. Our customers are finding that they can significantly reduce the amount of activity required to get significant savings by making their staff two or three times more effective.

They quickly discover that the focus on spending provided by our reports improves their efficiency. These savings are on top of the very high ROI they receive from direct material price reductions. They make their limited resources do the job of a fully staffer group.

Before I go on, let me state that Lytica’s tools are benchmarking analytics and, as such, they benchmark your performance against the same suppliers, channels and practices that you use. We are not changing anything about your supply chain, supply base or mode of working. We don’t sell components; our advice is independent and uncompromised.

Lytica’s approach to finding cost reduction is unique and it works, which is why we have an unprecedented repeat customer rate.  Confidence in our results allows us to offer a money back guarantee on your investment and we have never needed to issue a refund. All of our customers report increased knowledge, savings and improvement using our methods.

We have found that most traditional approaches to cost reduction are either unscientific or complex. The unscientific approach usually assigns a blanket cost reduction target indiscriminate to whether components have aggressive or uncompetitive   pricing. The complex approach involves trying to analyse manufacturing costs on components and determine a fair price from error-filled estimates. Both of these approaches underperform against our focused technique.

Our customers, some of the most prestigious and respected companies in the industry, refer to our methods as a “Best-in-Class” practice. Lytica’s Freebenchmarking.com focuses on your worst priced components with an average 80 percent achievability rate on the prices we estimate for you. Our estimates are specific to your supply chain and circumstance; we are not predicting prices only the biggest and best could achieve. Our calculations are based on a characterization of your spending and price prediction algorithms applied to current component price distributions.

Many traditionalists want to input every parameter associated with pricing into a formula to arrive at a price prediction but this approach is not practical. Just like predicting the weather, the number of variables is too great to have any chance in obtaining a reliable answer. Our characterization of spending yields a competitiveness level used as a proxy for the large number of factors that affect pricing. Although hard for some traditionalists to accept, this simplification works.

Both Freebenchmarking.com and Component Cost Estimator (CCE) offer a free of charge trial to determine your savings opportunity or verify your savings achievability. Freebenchmarking.com’s free Silver report characterizes your spending and assesses your savings opportunity. Component Cost Estimator provides reference pricing by manufacturer part number; in the Pay Per Use version of CCE the first 25 evaluations are free.

The next time that you receive a quote from a supplier, test it against CCE’s market price estimates; do not accept quotes that are out of line for your company.

We find that early adopters of our analytics are outperforming their competitors and that a portion of their success is a result of our contribution. These customers recognize that new approaches and ways of working set them apart.

By Ken Bradley – Lytica Inc. Founder/Chairman/CTO

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: