Cost Benchmarking in Polymer Compounding
Challenge
A large independent polymer compounder with an extensive product line required a best-in-class benchmark for compounding cost, inventory management, and customer service to drive down cost and improve margin.
Approach
Principia undertook a bottoms-up cost analysis of the Client's five closest peers by interviewing companies up and downstream of the compounding step in the supply chain to detail all components of conversion cost and assessed inventory practices as well as delivery lead times. Process and cost structure were mapped to compare each company on a similar basis with the Client.
Outcome
Client rationalized portions of its manufacturing base and established clear metrics for inventory levels for both standard and made-to-order products, saving more than $15 million a year.
Return to all chemicals case studies