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Most companies start out with the best intentions to achieve successful and sustainable supply chain cost management, but somehow seem to lose momentum, only to see costs increase again in fairly short order.
The following three mini case studies explore a few high-profile companies which have managed to sustain their supply chain cost reduction efforts and keep expenses under control. The challenges faced by these organizations and the steps they took, may provide some inspiration for successful long-term cost management within your own organization.
Supply Chain Cost Reduction Challenges Deere and company has a complex product range, which includes a mix of heavy machinery for the consumer market and industrial equipment which is made to order. Retail activity is extremely seasonal, with the majority of sales made between March and July.
The company also increased its use of third party logistics providers and effectively created a network which could be tactically optimized at any given point in time. Supply Chain Cost Reduction Challenges Somehow Intel had to reduce the supply chain costs for the Atom chip, but had only one area of leverage—inventory.
The chip had to work, so there were no service trade-offs that could be made. Being a single component, there was also no way to pay less in the way of duties.
The only option was to try and reduce levels of inventory which were, at that point, kept very high in order to support a nine-week order cycle.
The only way Intel could find to make supply chain cost reductions was to try and get this cycle time down and therefore reduce inventory. The Path to Cost Reduction Intel decided to try what was considered an unlikely supply chain strategy for the semiconductor industry: The company began with a pilot operation using a manufacturer in Malaysia.
Through a process of iteration, they gradually sought out and eliminated supply chain inefficiencies to incrementally reduce order cycle time. Further improvement initiatives included: Like Intel, Starbucks is pretty much a household name.
But like many of the most successful worldwide brands, the coffee shop giant has been through its periods of supply chain pain. As in most commercial sectors at that time, sales were falling.
Supply Chain Cost Reduction Challenges When the supply chain executive team began investigating the rising costs and supply chain performance issues, they found that service was indeed falling short of expectations. It also opened a new production facility, bringing the total number of U.
Next, the company set about terminating partnerships with all but its most effective 3PLs.
The remaining partners were then managed via a weekly scorecard system, which was aligned with renewed service level agreements. Making Supply Chain Cost Reductions Stick Of course the above case studies are merely summaries of the changes these high-profile brands made to their supply chains.
What can be seen from these brief accounts though, is that in order to make significant and sustainable cost improvements, substantial change must take place.
Intel had to shift an entire supply chain to a new and previously unheard of strategy in its sector. Starbucks had to shake up its third party relationships and increase production capacity.
At the same time, none of the changes took place overnight. In fact, each of the companies tackled issues in phases, effectively learning more as they went along. When it comes to making supply chain cost reductions that stick, each and every avenue must be explored. Seldom will major savings be made by whittling away piecemeal at what seem on the face of it, to be the most pressing issues of the day such as direct transportation costs or supplier pricing.The case study method of teaching applied to college science teaching, from The National Center for Case Study Teaching in Science.
At Fujitsu we create strong partnerships with our customers, enabling us to work together to find innovative solutions to business challenges.
Look at the case studies to find out more about how we can help your business. The challenges faced by these organizations may provide some inspiration for long-term and successful supply chain cost reduction and management within your own organization.
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Management e-Document Standard. PAR Electr e ndo 44 In December , in response to the global trend encouraging the establishment of national SWs and to the rapid change of ICT environment, the Republic of Korea enacted PART 3: Mini-Case Studies Republic The ].
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