Profit is a result of making good business growth; its not the why a company exists. The company values, service performance, good product quality and a competitive offer is The Why!
In order to secure continued success, a company should conduct regular practical value mapping exercises that are locally organised. They are to be viewed by participants as a positive activity, driving the business forward rather than being a threat to individuals and organisations within the supply chain. My main experience and success in this kind of activity was through the Cost Down Toolbox which involved analysing materials, manpower, machines and of course money.
The framework and process of activities in the Cost Down Toolbox are:
- Secure Buy In – Why Cost Down and everybody is on-board.
- Production/Process Walk Through
- Warm up exercise – get the creative juices flowing
- Design and component analysis
- Create draft action plan
- Production/Processing Analysis
- Finalise Action Plan – confirm responsibilities, lock in activities and time lines.
- Completed within the same day – providing a creative and challenging environment.
The Cost Down shall facilitate the understanding of cost structures, design/product tear down risks, process mapping and out of the box/creative thinking. The participants in these activity should include vendor,buyer,logistics and factory/process representatives including company board members if possible.
The tools to be utilised and made available during a Cost Down are:
- Factory/Operational Process Control results
- Product and Production Risk Analysis methodology and results
- Customer Experienced Product Quality viewpoints
- The Learning Box methodology and team activity results
- Sub supplier management reports
- The Democratic Design Viewpoint
Irrespective of whether its the buyers, the factory/processor or sub suppliers the outcome of a Cost Down activity shall be aligned to:
- Improved retail opportunities for all
- Costs reductions, not profit reductions
- Increased volume and efficiency opportunities
- Increase the supply chain partnerships including logistics
- Create opportunities for Price with a Meaning and Sympathetic Pricing..
The cost-down program is a road map to achieve cost reductions and performance improvements. It is a partnership process using teamwork, transparent communications and problem-solving techniques. The objective is to secure, continue and provide the key success factors of good business growth for all supply chain stakeholders.
Mark K. Astley: Robert Vernon Associates – working with and training on The Cost Down Toolbox..