Production Consumables Cost Reduction
Lower costs – No production stops
The company had noticed significant increase in their expenses for consumables in their plants (PPE, grinding, hand tools, support material etc).
Solution:
Consolidated several vendors into one major vendor with responsibility to manage resupply, buffer stock, negotiations, documentation
Implementation of industrial vending machines giving employees access to all needed material while monitoring consumption, automatic reordering, .
Costs
Significant reduction of prices and total cost from consolidation and negotiation
No Stops
24/7 access to materials/tools – no stoppage du to missing material
No ad-hoc “shopping”
No more time spend on ad-hoc trips to local vendors
Only approved materials available
Standardization of materials ensures only approved materials are used
Cables as Sub Components
Reducing costs by 80% – Fact Based Negotiation
Client buys a ready-made cable. Good negotiation results had already reduced price to index 70.
Using the Should Cost approach to analyze the components, calculating the “Should Cost” and thereby changing the negotiation to fact-based the end result was a price of index 20 compared to original price.
Structured Analysis
Detailed breakdown of components allowed for detailed pricing
Fact Based Negotiaiton
Achieving better results
Client used process on more components with great success
The Should Cost Model was introduced with the client and is applied with great success
Logistics and warehousing
Outsourcing of warehousing and transport for spare parts and tools.
Industrial manufacturer wanted to close DK warehouse and logistics function due to high cost levels. Analysis showed that a full outsourcing was the most attractive option.
Tender resulted in awarding an end-to-end contract to a large transport company which manages goods reception, quality control, pick/pack, shipment,
significant cost reductions
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transport company responsible
For improving costs by a fixed percentage yoy
full system integration
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IT Equipment
Standardization and Negotiation
To support the company’s updated IT strategy and reduce costs, it was decided to standardize products and services across all EMEA locations.
To facilitate this, a project was launched to identify and negotiate with one vendor able to supply the approved range of products across EMEA.
Solution included buffer stock, pre-installation of laptops, short-lead-time replacements etc.
outcome
Standardization of IT HW resulted in shorter employee onboarding, easier re-use of equipment and cost reductions .
simplicity
Standardization supports centralized IT support (offshored).
IT security
Improvement of IT security as all PC’s running on same SW and with same pre-installed SW.
DIGITALIZATION
Implementation of “Source 2 Pay” tool
Improving the ordering and payment process at a large industrial manufacturer.
Implementation project included redesign of ordering and approval processes, IT project management, Key success factors was involvement/change management, supplier onboarding, user trainings.
In step two, the operational procurement (PO management) was off shored to low cost country.
smooth and easy process
High user acceptance as result of improved processes, clear visibility of progress /status for each order and inquiry and ease of use
reduction of cost pr order
Order processing time reduced from days to few hours. Costs pr. Issued PO reduced by >70%.
PO approvals by e-mail in stead of signatures on PDF files/physical documents.
cost control
Higher usage of preferred vendors and corporate agreements not only improves visibility but alst provides lower prices.
cleaning services
Standardization and Consolidation of Cleaning services
Significant reduction of costs for DK based industrial manufacturing company. Company has a number of locations with differing approaches to cleaning. Key element in contract is that the premises are to be clean – not how or how often . Parties have agreed on a level of cleanliness which the provider maintains.
stndardization of servcies
Implemented a standard service level across locations in DK
Easy monitoring and follow up for service provider and customer
flexible model
Cleaning frequency can be adapted to suit customers’ needs better (vacation, changes to business, Pandemic needs)
deDedicated contract manager
Delivery owner responsible for services owns cooperation with provider: Clear responsibility and clear communication.
collaboraiton model
Unique model where cleaning staff is made visible and responsible for an area and is approachable.
Output based contract rather than input