Client Background: A European importer purchasing LED streetlight components from a Chinese manufacturer, with annual procurement volume exceeding $5 million.
The Case Brief Study
Challenge: The client’s streetlight lens design had unnecessarily high material and manufacturing costs. The existing supplier was unwilling to suggest improvements, as the current design generated higher margins for them.
REPA Solution: REPA’s engineering team analyzed the lens specifications, identified redundant material thickness and over-engineered curvature, and collaborated with an alternative supplier to prototype a redesigned lens that met all optical performance requirements at significantly lower cost.
Result: Annual savings of $178,500 across the client’s full procurement volume. The lens redesign also reduced weight, cutting logistics costs by an additional 3%.
Case Details
I have a client who sells streetlights. One day, he complained to me. He said his project costs were getting higher and higher. He asked if we had a cheaper streetlight model.
I asked for more details. I learned that our product was designed for a two-way, four-lane road. But the client had new projects for eight-lane roads. Our lights were not bright enough.
So, his only solution was to install another row of streetlights on the other side of the road. This meant his project budget basically doubled. It is no wonder he and his customers were complaining.
After some research, we offered a solution. We could add a handle to each streetlight. This handle would let the light tilt higher and stick out further. It could then light up areas it couldn’t reach before. This way, he would not need to install lights on the other side of the road.
But, this handle was not cheap. Let’s say the structure of a streetlight costs $2. This does not include the optics and electronics. Adding the handle would cost another $1. That was a 50% increase in the structural part’s cost.
This high cost was a problem for us. The handle was also big and heavy. It would add extra costs for shipping and installation. So this solution was just barely acceptable for the client. He saw it as a temporary fix. We called this Cost Reduction 1.0.
[STORY: about a time an imperfect but quick solution taught me a valuable lesson about digging deeper]
If a problem exists, you have to find a way to solve it. The handle was only for adjusting the light angle. So I thought, why not work on the lens directly?
But at that time, I did not know much about optics. My supply chain management only reached our tier-1 suppliers. I knew almost nothing about tier-2 suppliers like lens factories. What is a tier-2 supplier? Think of it this way. McDonald’s buys Coca-Cola, then sells it with their chicken. McDonald’s is your tier-1 supplier. Coca-Cola is your tier-2 supplier.
So we could only ask our supplier to recommend different lenses. Then we would send them abroad for real-world testing. We wanted to see which one could achieve our goal.
Sadly, it did not work. We sent countless lens samples. Two months went by. We still had not found a suitable lens. The reason was simple. The factory’s purchasing department was very basic. They were just acting as messengers. We said we needed lenses. Their purchaser went to the lens factory and asked for lenses. He did not care what kind of lens we actually needed. He just sent a whole basket of samples to us.
Finally, I could not take it anymore. We flew directly to the supplier’s factory. We went into their sample room and searched for a lens. After about half an hour, we found one that was similar to our needs. I was so happy. I felt we were one step closer to our goal. But then, a terrible thing happened.
The supplier’s purchaser said he could not remember which factory this lens came from. He said he had too many samples. It felt like I had studied for a big exam for months. I had even told my dream girl, "See you at Tsinghua University." But then I suddenly got a high fever the day before the exam.
When there is a problem, you have to solve it. We left the sample room. We went to the supplier’s sales department. We showed them the lens. We asked if they remembered selling it to any other clients.
Of course, they would not tell us the name. They only vaguely said it was developed for a German client a long time ago.
That information was enough. We went back to our hotel that night. We used customs data to find out who this German client was. Then, we searched all of the German client’s suppliers. Luckily, we found a lens factory on their list.
The next day, we took the lens factory’s name to the supplier’s purchaser. Bingo, it was the right one! But this time, we decided to contact the lens factory directly. It was not to get a cheaper price. It was because the supplier’s purchaser was not managing his own suppliers well. And he did not know much about lenses himself. Why have someone in the middle who just slows things down?
So, with an introduction from the purchaser, we contacted the lens factory. But that did not mean everything was smooth from then on.
After we connected with the lens factory, we could use their professional knowledge and equipment. We could run simulation tests right in their factory. We no longer needed to ship samples abroad each time. This saved a lot of time and money. But the biggest problem was that all their previous clients were from Europe. They knew nothing about North America. They did not know the certification standards, testing standards, or validation methods. Our client only had a partial understanding. They just sent us a document dozens of pages long and told us to figure it out.
So what could I do? I had to grind it out. First, I read the entire document. (Now, with AI, this would be much faster). Then, I translated the standards into simple Chinese for the lens factory’s engineers. We discussed the best way to achieve our goal. We adjusted the product’s structure bit by bit based on the test results.
Half a month later, the client received the new lens samples. After testing, he sent us an email. It said, "the test result is great." I breathed a sigh of relief. I felt a huge sense of accomplishment. After that, the client placed orders for five 40-foot containers with this new lens. Because they no longer needed the expensive handle, the client saved $178,500 that year. And that does not even include the savings on logistics and installation. We call this Cost Reduction 2.0.
But the story does not end there. Through this project, we learned so much about optics and lenses. This new knowledge helped us eventually achieve a 60% cost reduction on the lens itself. We call this Cost Reduction 3.0.
Key Takeaway
Suppliers rarely volunteer cost-saving design changes because their incentive is to maximize margin, not minimize your cost. A third-party procurement agent with engineering expertise can identify optimization opportunities that suppliers deliberately overlook.
My Thoughts
If I had to define the boundaries of product knowledge for a business person, here is my view:
- For a developer, the knowledge boundary is being able to build professional trust with the client. You must understand their needs when they describe them in technical terms. This is the minimum requirement.
- For a business operator, the knowledge boundary is being able to design solutions for the client. You must do this with the help of suppliers, factories, and engineers. This is the highest requirement.
- For a project coordinator, the knowledge boundary is being able to understand the technical language of all parties. You must be a bridge for communication, not just a copy-paste messenger. This is the medium requirement.
Most people in international trade are best suited to become business operators for their clients. But what if we do not understand the industry, the product, or the market? When a client says, "the product is too expensive now," could we create a step-by-step solution from 1.0 to 3.0? This is especially true for sourcing agents. We deal with suppliers every day. If you do not know the product, it is hard to negotiate even a small discount. A 20-30% cost reduction is out of the question.
In most manufacturing and trading companies I know, production, technology, and sales work in separate silos. You cannot expect someone in R&D to understand the customer and the market. And you cannot expect a salesperson to have a deep understanding of the product. Even if some companies have a "Product Manager," it is often just an engineer who speaks English. They are there only to reduce communication barriers.
In this situation, supply and demand are disconnected. R&D might just work on products in a lab that will never sell. Salespeople slowly become quoting machines. Or they just become messengers who ask the boss for a price cut. They forget that a salesperson’s real job is to mobilize resources to meet the client’s real needs. They should do this with the lowest cost and risk. If you do not deeply understand the whole chain yourself, how can you "mobilize" anything? A "we can’t do it" from production will shut you down. In the end, it all comes back to arguing about price.
Take this case as an example. The client first complained about the high price. Did he really just want a cheaper streetlight? Not at all. He wanted a way to light an eight-lane road at the lowest possible cost. If I had just focused on asking my boss for a discount, I would have failed completely.
The three key parts of true consultative selling are:
- The salesperson helps the client understand their challenges and opportunities in a new, better way.
- The salesperson provides the client with new, better solutions to achieve their goals.
- The salesperson acts as the client’s protector within the supply organization and even up the supply chain.
The product is just a vehicle for the solution. If a salesperson does not understand the product, they cannot provide a real solution. They cannot be a supply chain protector. You probably will not even understand what the client’s problem is. And you will not know what options are available to solve it.
To achieve this takes so much more effort than "just one action."
