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Tag Archives: Price with a meaning

The Cost Down Activity

23 Thursday Apr 2015

Posted by mkastley in RVA Updates

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Tags

Cost Down programme, Price with a meaning, production costs

cost down 3

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:

  1. Secure Buy In –  Why Cost Down and everybody is on-board.
  2. Production/Process Walk Through
  3. Warm up exercise – get the creative juices flowing
  4. Design and component analysis
  5. Create draft action plan
  6. Production/Processing Analysis
  7. Finalise Action Plan – confirm responsibilities, lock in activities and time lines.
  8. 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..

Price with a meaning..

31 Saturday Jan 2015

Posted by mkastley in RVA Updates

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Tags

CEPQ, customer experienced product quality, Price with a meaning

price with a meaning

When talking about the price of a service or product we all know the maxim ‘you get what you pay for’. Of course there is no reality to this! No matter how low the price, if it doesn’t do what it says on the tin or is actually very poor doing it, then its expensive!!

When I worked for IKEA the big statement when designing, sourcing, working with factories and communicating with customers was ‘low price with a meaning‘. Just to have a cheap product with poor functionality, design, quality and ethically unsound has no meaning!! Everything has to have a value no matter the price.

How can organisations achieve low price with a meaning? As with all things it requires the virtuous circle of the following:

The Price: Achieving a low price requires a concentration on high volume, with a high degree of industrialisation to secure the most efficient production process. Raw materials are secured in terms of sourcing, specification, availability and all within a transparent supply chain..

Supply Chain Agility: A forecast and order planning system that shrinks the distance between the point of sales and the factory. Regular shipments with stock having a status of evil! Implementing a supplier matrix set up of 70-30. Split the sourcing between two factories, securing high production utilisation at the 70% factory and the rest as a security back up at a newer supplier being developed for future business.

Secure Product Quality: Please see my previous  article CEPQ – Customer Experienced Product Quality

Socially and Environmentally Assured: Secure the following basics:

  • Transparent and well supervised supply base including sub suppliers and contractors to the direct vendor factories.
  • Secure legal, clean and efficient factory supply.
  • Well managed labour in the supply chain – no child labour, no excessive hours etc..
  • A legal and well paid workforce securing an efficient and motivated factory.

The Product Design: See my previous LinkedIn article Democratic Design..

Everything that is made and supplied must have a meaning. It should be part of a company’s intrinsic value whether they are in the low volume/high price or the mass volume competitive market. Its all part of Good Business Growth…

Whatever the market, products have to be competitive, design and quality assured, produced and supplied by companies that care! As Apple Inc and IKEA have proven; customers buy why and not always the what !!

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  • A new angle on Good Business…
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factory audits on The Factory Visit – Good…

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