CASE STUDY

Reducing the Costs of Goods Sold (COGS) by 27% for a Surgical Instruments Company in the US

Dec 17, 2019

US Surgical Instruments Industry Overview

The surgical instruments industry makes an enormous number of products and plays a critical role in developing new medical technologies. The industry has a relatively larger number of companies that engage in research and development of new devices for specific therapeutic areas. The market dynamics for surgical devices vary greatly depending upon the device. Companies compete heavily on price and often need high sales volume to be more profitable. This case study is a classic example of how we helped a leading company in the surgical instruments industry to reduce the COGS significantly.

Business Challenges Faced 

The client, one of the leading firms in the surgical instruments industry was facing predicaments due to increasing competition from new low-cost manufacturers in the US. They urgently needed to identify ways to reduce their costs of goods sold (COGS). Visibility into organizational spend, granular insights on buying activities, and optimization of the supply base were imperative to achieve spend reduction goals. However, this was putting additional strain on their already lean procurement and sourcing department. The client, therefore, felt the need to associate with SpendEdge to gain strategic sourcing and procurement market intelligence services. 

Inability to compete with low-cost manufacturers can impact the ROI and market position of companies in the surgical instruments industry. Request a free proposal to access our tailor-made solutions.

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Our Research Approach

With experience in sourcing, the experts at SpendEdge understood the best approaches to every step of a thorough strategic sourcing process in the surgical instruments industry from identifying suppliers to the RFP process. They identified quality direct material suppliers for a reasonable price point to help the client effectively navigate a global partnership with suppliers considering the current state of socio-political unrest in several foreign countries. This helped the client to nurture a relationship with reliable low-cost suppliers and enhance the strategic sourcing process.

Furthermore, the insights provided enabled the client to explore potential synergies within the incumbent supplier community to enhance the designing and engineering capabilities. The current supply chain and sourcing processes were evaluated to document minimum quality standards and capacity specifications that suppliers must comply with. Also, during the engagement, the experts explored the opportunities for supplier consolidation within the existing supply base.

Engagement Outcome 

The surgical Instruments industry report offered helped the client to identify low-cost suppliers within the existing supply base and reduce the costs of goods sold (COGS) by 27%. It also helped the client to evaluate other sources of manufacturers who provide cost-effective products, thereby optimizing the supply chain, increasing supplier value, and minimizing organizational spend.

Gaining accurate market insights and engaging with potential suppliers is crucial for companies in the surgical instruments industry to minimize the COGS. Request a free demo to access our web-based procurement platform and gain detailed insights. 

Procurement Best Practices in the Surgical Instruments Industry 

  • Create a surgical instruments inventory to ensure a fully stocked facility. 
  • Create a budget considering distributors, inventory turnover, and product quality. 
  • Identify suppliers who offer customized trays or sets for common procedures.
  • Ask quotes from multiple distributors and select who can keep up with your requirements.

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