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Prokura Case: Packaging Paper Reduction Strategy

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Case Prompt

Our client is a global company that specializes in manufacturing of different types of packaging. The company produces 2 types of packaging paper: Paper wrapping without foil inlays and paper wrapping with foil inlays (e.g., for packaging of fluids). The client buys materials such as paper, paint, and foils from various suppliers and just invested in machinery to manufacture their range of products. They wish to reduce costs and would like to know the best way to do so. Fixed costs like machinery and rent cannot easily be reduced in the short run. Is it still possible for them to reduce costs by one third (~33%) in short term?

0. What factors may be contributing to the costs for manufacturing of packaging paper?

1. Let’s look at the prices of materials for the client’s production. What are the most important raw materials cost components for the product?

2. The client already shared some information on prices for different paints for the product “Paper packaging”. How much does our client spend per ton on both white paint and other paints?

3. What levers can be used to reduce the cost for paint?

4. Bundling can be quite successful. The client wants to know, if they can achieve the goal of (~33%) reduction in costs for the production of paper packaging by bundling volumes of white paint?

4.1 Is there another possibility?

5. What risks are involved in our client’s proposed strategy?

6. What is your recommendation for the client?

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