Challenge

A leading Medical Device Company (MDC) wanted to reduce the cost of a component in their product. The component was designed by an external company and made by a contract manufacturer. The manufacturer sells the part to a distributor and then buys it back to sell to MDC. The cost per unit for MDC is between $4-5 at 500,000 units per year, leading to an annual spend of $2-2.5 million. MDC believes that by working directly with the external company that designs the component, they can reduce the cost to about $1 per unit. This would save them over $1.5 million annually, reducing the total spend to around $500,000, which is savings of over 75%.

Solution

To start, MDC asked Prodigy to check if there were any patents on the component design. Prodigy found that there were no patents that would prevent a redesign. MDC’s legal team reviewed these findings and gave the go-ahead to redesign the component with their own branding. Next, MDC worked with Prodigy to create a new part that could replace the original component. Prodigy provided the data and drawings so MDC could make a prototype and test it to ensure it worked the same way.

Outcome

With Prodigy’s help, MDC was able to reduce the cost of the component from $4-5 per unit to $0.40 per unit. This lowered their annual spending on the component from $2-2.5 million to just $200,000. This means they achieved a 91% cost savings, which is much higher than the 75% they initially expected.

“We came to Prodigy with a need to redesign a component to streamline our supply chain and reduce the cost of goods. Prodigy’s expertise is engineering and design allowed us to use their new model to create a new tool and drawing to manufacture the new component. Prodigy’s involvement allowed us to reduce the workload on our design staff internally.” – Gene Payne, Principal Engineer