Page 9 - MCS August Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

working towards may again no longer be viable, as customers wouldn’t be willing to pay as much
for a product of lower quality.

Cost reduction methods.

Montel may choose to focus on individual costs in order to try and reduce them. For instance, if
there are currently material wastage costs or idle time included within the production costs, they
may seek to find ways of reducing these.

They could also look to re‐negotiate prices with suppliers, or look to take advantage of potential
supplier discounts, for instance for bulk purchasing.

Montel might decide to find a cheaper supplier, bearing in mind that quality cannot be
compromised. Similarly, for the labour elements, lower skilled, cheaper workers may be used as
long as quality isn’t lost.

The company could take a wider approach and look to the features and functions of the product
itself, using value analysis / functional analysis as a cost reduction tool.

These analyses would look at what customer’s value about the product and ensure that any cuts
in cost did not compromise this value. So for instance if customers really value the sturdiness of a
metal casing the company would not want to compromise this by moving to an inferior material.
But if it could find a cheaper, more modern material that wouldn’t compromise on the sturdiness,
it could look to use this instead.
If cost is spent on areas that customers do not value or on functions that are not used (perhaps
professional photographers don’t need the ability to instantly upload photographs to social
media) then Montel could focus on cutting costs in these areas.

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