Eurocopter, Europe's largest manufacturer of civilian and military helicopters, recently invested in the PRICE Hardware model. As a progressive company in the aeronautics industry, Eurocopter knows how important it is to use its resources wisely to give the company a competitive edge and ensure profitability. They licensed PRICE H because of its usefulness and its ability to assist them during negotiations of purchased materials. The opportunity to prove the return on investment on PRICE H came during vendor proposal validation on a major project. To obtain the most accurate measurement possible, they called on PRICE to assist them.
The vendor supplied Eurocopter with a proposal for the unit cost of a vital component. The procurement department believed that the proposed cost per unit was excessive. Using the PRICE H model, Eurocopter with the assistance of a consultant performed the cost analysis in five days. After reviewing the completed analysis, Eurocopter’s earlier suspicions about the proposal were correct. There was an identified cost overrun of $5.5K per unit. The project required 200 units over ten years, which results in a total savings of $1.1M.
|
|
Initial Analysis | Over ten- year period |
| Number of Units | 1 | 200 |
| Identified Cost Overrun | $5.5K | $1.1M |
| ROI | $5.5K | $1.1M |
The PRICE data enabled Eurocopter to support their claims of a cost overrun and to renegotiate the purchase price with its supplier. Eurocopter's Project Manager, stated, "If we had had PRICE H from the beginning of this project, we could have performed vendor selection analysis on many of our suppliers and multiplied our savings. We now plan to inform our entire team of buyers on how to use PRICE H to make better purchasing decisions."
As this case study illustrates, applying the PRICE models systematically throughout the entire enterprise will allow your company to receive the largest return on their investment possible. We want to build upon the trust and expertise we have earned over the last 25 years of unmatched service to global Fortune 1000 companies. We can help you obtain your immediate business goals and be your long-term strategic partner. PRICE is committed to your success.
"If we had had PRICE H from the beginning of this project, we could have performed vendor selection analysis on many of our suppliers and multiplied our savings. We now plan to inform our entire team of buyers on how to use PRICE H to make better purchasing decisions."