How to save Material Cost in Supply ChainRavi SundarRajan
How much is 1% of your total Material Cost?
A typical manufacturing company spends 60-70% of its total revenue in direct material procurement.
If your company has a revenue of say $100 Million, 60-70 Million could be spent on direct materials. 1% of it is $600-700 thousands. That is lot of money to let go loose due to poor communication in Supply Chain.
The below scenarios appears to be simple and part of day to day operations of a company. But it all add to your material cost and can easily be avoided.
- Delayed deliveries. No early warning that Supplier is not delivering on time. Production stop due to material shortage.
- Expedited shipment at high cost due to unforeseen material shortage.
- Excess inventory carrying cost at Contract Manufacturing locations
- Obsolete inventory that could have been liquidated earlier.
- Not using Lean Manufacturing technology – JIT,KANBAN,VMI
- Redundant data entry operations – Manual key in invoices,order confirmations,shipment
Can you believe that if you had an Integrated Supply chain system that could connect to your suppliers electronically, all the above wastage could have been avoided.
Do you still use email and phone calls to manage your suppliers? If so, Your supply chain is at least 10 years old in technology.
Act now, talk to us at TPSynergy(www.tpsynergy.com) to see how we can implement electronic integration in your supply chain.