Integrated Material Cost Optimisation

... is a tool designed to generate savings in material cost by improving product design, procurement specifications and usage behaviour.

Situation:
Classic Purchasing focuses only on finding the best price for a particular material or component based on material requirements set by other departments.

Solution:
Purchasing costs are reduced by optimising the supply chain, technical specifications of materials and usage patterns along the whole value chain.


Steps to success:

  • Functional analysis of the current product portfolio and materials used
  • Definition of the functional requirements of materials and components
  • Benchmarking of material costs with regard to functionality against alternative products of competitors
  • Selection of the most cost-effective solution according to functional requirements
  • Optimisation of the sourcing procedure for materials and components

Scope of profitability improvement:

  • Production materials: 10 - 20% of variable production cost (material and labour)
  • Non-production materials: 5 - 10% of purchasing cost
  • Capital Equipment: up to 40% of total cost of investment


More details:  icon Integrated Material Cost Optimisation

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