Download The Incredible Payback: Innovative Sourcing Solutions That by Dave Nelson PDF

Show description

But expert application of these two approaches takes a good company into the small group of excellent performers who project and deliver 5 percent savings or more annually. Raising levels of supply base performance does not come without some upfront investment, however. Deere added 175 new strategic supply management positions: 100 for supplier development, 50 cost management specialists, and 25 Best Practice specialists.

If they could see that same network, however, as an enormously complex cash transaction system with currency flowing in and out of dozens of ATMs, they might be able to tally up the grand total of the spend as well as the possible savings (see Figure 1–1). Spend Management demands, however, that companies look at their networks of rapidly moving materials, and slower moving inventories, as real money, cash. Visualize the network of some five hundred suppliers required to produce a single automobile constructed with five or six thousand pieces.

Kaizen saved Lantech, a Louisville, Kentucky, packaging equipment producer, a pioneer in lean or kaizen methods. Lantech used kaizen to redesign products and power new product introductions, as well as to take waste out of shop floor production and material flows. In general, companies can expect to see efficiency improvements rise from 20 to 50 percent; inventory reductions (raw material, in process, and components) are drastic and immediate, from 20 to 80 percent; distance traveled on the production floor, another way of looking at inventory cost and inefficiency, is usually cut in half, with some areas showing reductions up to 90 percent; productivity, a measure of how well production uses labor, equipment, and materials—as in number of pieces produced per hour— improves by 10 to 50 percent.