Case Study
Industrial Equipment Cost Optimisation
Value engineering and competitive benchmarking to achieve 35% cost reduction and 50% margin improvement.
Project Background
Client & Project Overview
The context behind the engagement and the strategic goals that shaped the scope of work.
Client Profile
A leading North American manufacturer of high-performance outdoor power tools, log splitters, pressure washers, and air compressors, serving both commercial and residential markets.
Project Overview
A complete cost transformation and design refinement of the Log Splitter lineup. The goal was to maintain product quality and safety while achieving substantial cost reductions through Cognition's PCM approach, uncovering inefficiencies, benchmarking competitors, and proposing high-impact design optimisations.
35%
Cost of goods reduction
50%
Margin improvement
Objectives
Client Objectives & Business Perspective
What the client needed to achieve and the business rationale driving each priority.
Client Objectives
What they needed to achieve
- 01
Manufacturing cost reduction
- 02
Improve margins up to 50%
- 03
Move down the price ladder
- 04
Re-imagine product architecture
- 05
Benchmarking with market leaders
- 06
Reverse engineering of competitor models
- 07
Process quality enhancement
- 08
Factor of safety validation on re-engineered parts
Business Perspective
The strategic rationale
Market Positioning
Enhance brand value and product appeal
Compete more aggressively on the price ladder
Revenue Growth
Increased margins with cost-effective designs
Expand customer base with optimised SKUs
Approach
Cognition's PCM Approach
Four interconnected workstreams that formed the foundation of the cost transformation programme.
1Cost Analysis & Optimisation
- Conducted a thorough review of material costs, design efficiency, and manufacturing processes.
- Applied value engineering principles to identify cost-saving opportunities.
- Implemented should-costing methodologies to drive supplier negotiations.
2Physical Benchmarking
- Performed hands-on analysis of competitor equipment to gain actionable insights.
- Compared product performance and material choices against industry standards.
- Leveraged reverse engineering to understand competitor cost structures.
3Applied VAVE Method
- Utilised VAVE methodology to optimise design and manufacturing simultaneously.
- Focused on enhancing product value while reducing unnecessary costs.
- Implemented a phased approach with regular feedback loops to refine recommendations.
4Cross-functional Collaboration
- Engaged with client teams across engineering, procurement, and operations.
- Facilitated workshops to identify and implement cost-saving opportunities.
- Provided training and knowledge transfer to internal teams for continuous improvement.
Findings
Key Findings & Deliverables
What the analysis revealed, and the set of outputs delivered to the client.
Analysis
Key Findings
- 1
Major weight savings and design simplification opportunities were found across valves, cradles, tanks, and support structures.
- 2
Several components were over-engineered, leading to excess material usage and fabrication costs.
- 3
Benchmark competitors utilised fabricated or modular designs with fewer parts and less hardware.
- 4
Opportunities to standardise SKUs across product families to improve inventory and sourcing efficiency.
- 5
Hydraulic tanks, filter systems, and frames showed potential for leaner, cost-effective alternatives.
Outputs
Deliverables
- SWOT Analysis
- Pareto Analysis (80/20)
- Idea Pool Generation Report
- DFA / DFM / DFMEA Reports
- Root Cause Analysis
- Should-Costing
- FEA Reports
- Final Manufacturing Drawings
- Costed BOM Evolution
- Vendor Identification
- Function Cost-Worth Analysis
- Competitive Benchmark Report
Results
Summary of Gains & Business Impact
The quantified and qualitative outcomes delivered through the PCM engagement.
Before vs After
Business Impact
| Metric | Before | After |
|---|---|---|
| Manufacturing Cost per Unit | 100% | 65% |
| Gross Profit Margin | ~30% | 45–50% |
| Component Count (avg.) | High | Reduced |
| Part Standardisation | Fragmented | Streamlined |
| Engineering Complexity | High | Optimised |
| Time-to-Market (future SKUs) | 100% baseline | ~70% baseline |
Outcomes
Summary of Gains
35% cost of goods reduction
50% margin increase
Improved market position with competitive SKUs
Engineering backbone for scalable SKU platforming
Data-driven, modular, manufacturing-friendly design