Project Experience

Analyzing A Competitor's Operations Can Lead To Significant Improvements In A Firm's Cost Structure

Client Situation
By studying a competitor's manufacturing processes, firms can identify areas of improvement in their own operations. Contact-lens and lens-care product manufacturers have come to believe that the lens-care product segment that was once a revenue driver with large margins will diminish as extended-wear lenses become more popular and eliminate the need for daily or even weekly contact-lens care. Some manufacturers have therefore determined that future margins will be obtained in making the lens manufacturing process more efficient through cost-cutting and new manufacturing technology.

Fuld Approach
By examining the equipment used, run rates, and production complexity, Fuld & Company was able to learn the production costs of our client's competitors. We found that there were many similarities in both operations, but the competitor used enough cutting-edge technologies to gain significant cost efficiencies.

Benefits and Implications
In learning not only the production costs of its competitors, but also what new technologies were employed in the manufacturing process, our client was able to reassess its own operations. This information was critical in understanding where its own processes could be upgraded and ultimately where margins could be increased. For more information on price and cost structure in the healthcare industry, contact either Anthony Nagle at tnagle@fuld.com or Cynthia Gerber Tomlinson at cgtomlinson@fuld.com