OPTIMIZING YOUR SUPPLY CHAIN
Let's explore together these and other factors to determine the best strategy for your company's specific situation and identify the steps for successful implementation
There are many factors to consider when defining a supply chain and manufacturing strategy, including:
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what to build in-house and what to outsource?
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how to optimize inventory?
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where the links in your supply chain should be?
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what dual sourcing is desired for risk mitigation?
CASE STUDY IN REDUCING INVENTORY
Company Challenge:
Inventory at this multi-national distributor was growing - and was growing faster than sales. This unnecessarily tied up the company's cash. There was no process to analyze and reduce inventory or identify excess, obsolete, or slow-moving inventory.
Lustig Global Consulting's Solution:
Working with the Sales and Operations teams, we first identified slow moving inventory (inventory that had been in stock for over a certain number of days). This report was analyzed, and I guided the sales teams to drive disposition of this inventory, preferably through focused sales effort. Next, I led the implementation of a Sales and Operations Planning process (S&OP) which further reduced inventory by focusing on preventing unnecessary new orders through establishing detailed, reviewed forecasts and setting up approval levels for orders.
Company Benefits:
Inventory turnover days declined by over 40% in less than one year. Slow moving inventory as a % of overall inventory (the KPI that I developed for this company) was reduced by 2/3 within a year.
CASE STUDY IN SUPPLIER SELECTION
Company Challenge:
An OEM company needed effective manufacturing partners for both New Product Introduction (NPI) and volume production. Cost, quality, on-time delivery, and support were key company criteria for success.
Lustig Global Consulting's Solution:
I took the following steps, partnering with company personnel as appropriate:
-Understood and documented the company's requirements and criteria
-Identified potential partners
-Created, sent, and analyzed the results of a Request for Quote (RFQ)
-Chose the best contract manufacturers (CMs) based on Total Cost of Ownership (TCO), which includes cost paid, quality, on-time delivery, etc.
-Created, monitored, and improved KPIs related to cost, quality, delivery
-Collaborated for continuous improvement
Company Benefits:
My process resulted in the selection of multiple suitable contract manufacturing partners. By utilizing the robust selection process, well-defined KPIs, and a collaborative continuous improvement process with contract manufacturers we achieved high levels of quality, delivery, and cost reduction.
CASE STUDY IN SUPPLY CHAIN COST REDUCTION
Company Challenge:
Newly acquired and split off from its previous parent company, this electronics division needed to establish a supply chain and procurement department and a way to competitively quote and source materials/parts, reduce inventory liability (which was tying up cash), and minimize the risk of supply chain shortages, which impacted factory utilization, revenue, and customer satisfaction.
Lustig Global Consulting's Solution:
I worked with a team of buyers and component engineers to establish processes and tools to address this need. This included creating quarterly quoting efforts (RFQs), tracking and reducing single source parts, developing new suppliers, creating Vendor Managed Inventory programs, and establishing high level relationships with key supply chain partners.
Company Benefits:
These efforts led to costs savings of 2-3% each year (over $1M annually). Supply chain risk and delays were significantly reduced through the focus on dual sourcing parts where feasible (in some cases going from 80% single source parts on a Bill of Materials to less than 20%). Vendor managed inventory programs were established for dozens of parts, improving cash flow.