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|Automotive global sourcing and
of successful cases preceded the ones described
here for the same customer.
value and high complexity commodity areas was
addressed as there was an urgent need to improve
cost in this area of the car. The technology drive
within the area is fast and therefore a limited
renewal rate of content and subsequent action from
purchasing will have cost increase effects, i.e.
old technology will cost more than new technology
in many areas.
step was to help out the team to define a product
structure in preparing the a global sourcing task.
The area has mutliple variants and the similarity
and commonality among these variants were not
defined. Once the structure was defined, potential
sourcing candidates were defined and audited. The
quoting process started, detailed and split up
bids were collected for all reference products.
These were analyzed in depth with the team.
was a cost potential of -30%, equivalent of 900
MSEK, if the portfolio would be spread among a
limited number of suppliers. First result after
the 1st negotiation round was a direct price
reduction of 10%, equivalent of 300 MSEK with
existing suppliers. The residual potential had a
high probability of implementation.
revealed numerous opportunities and also hidden
waste in terms of product structure not well
defined for efficient purchasing. This is typical
for commodities with a large number of part
numbers involved and also for high complexity
commodities. This is an interesting opportunity
area besides "black box" and "OEM" purchasing
within most industry sectors.
customer had no success and no cost improvement
with current supplier of a high complexity and
high value system in all car platforms. This
situation was not satisfactory after 5 years
with increasing cost and limited improvements.
OnTrack was appointed to run a supplier
development task with a customer supplier team.
step was to perform a detailed cost analysis of
design, sourcing and manufacturing cost. A
reference calculus was set up for a major volume
system. All parts of cost were then analyzed in
teams with focus on cost structure, cost drivers
and improvement opportunities. The key to task
success was knowledge and methgods and the
principle of teams target, to reduce cost, not
only supplier price.
was a true success and a cost improvement of -10
M€ was the result of a 3 month project, equivalent
to less 9% of price. The customer was satisfied
and so was the supplier as the result was not
subject to a true simplfied price pressure
activity, on the contrary it was actually reducing
true cost enabling substantial price reductions.