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Case Studies

Supply Chain & Operations

Make vs. Buy assessment and negotiations for a global healthcare company

A global healthcare services provider needed assistance with a Make vs. Buy assessment. Applied Value developed a strategic Make vs. Buy framework and identified 22 MUSD in annualized savings.

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Situation

A global healthcare provider’s production facility was nearing capacity constraints for several plastic-based products. Applied Value was brought in to evaluate the financial and strategic impacts of outsourcing production to a low-cost country and to realize further savings through negotiations.

Approach

Applied Value performed an initial assessment to understand and quantify costs associated with expanding capacity (CAPEX investment, labor costs, etc.). AV developed and shared an RFQ with suppliers to build out the buy-side cost of outsourcing. Applied Value conducted negotiations with low-cost country suppliers on behalf of the client to further understand the quality implications of low-cost country outsourcing (ISO standards, FDA certifications, etc.) and to create cost-saving opportunities.

Results

Applied Value developed a strategic Make vs. Buy framework and playbook as part of a structured approach to evaluating product categories in the future. Applied Value also identified 22 MUSD in annulized savings opportunities across four product lines. AV built a total cost of ownership (TCO) model and identified an additional 1.25 MUSD in related logistics costs. 

22 MUSD million USD

cost savings

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