Cost Reduction Process

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Cost Reduction Process

  1. 1. Sowing Seeds forSavings and Success (S ) 4Rey G De Guzman11, 26, 2009
  2. 2. S4 Topic Outline1. Management Brief ………………………………….... 32. S4 Framework ……………………………………....... 43. S4 in Details 1. Plan 1. Crew ………………………………………………………. 5 2. PRoMT2 ………………………………………………….. 6 2. Do 1. BOM ………………………………………………………. 7 2. LIFE Plan …………………………………………………. 8 3. Check 1. PLUS ……………………………………………… ……. 9 2. QBR ………………………………………………………. 10 4. Act 1. CTSB …………………………………………… ………. 11 2. CST ……………………………………………… ………. 12 3. CTCM ………………………………………… ………… 13 4. ESWY ……………………………………… …………… 144. Way Forward………………………………………… 15 2 Subject / Department / Author - February 2, 2013
  3. 3. 1. Management Brief Background: – XXX Supply Base Management had done well to successfully negotiate lower prices from the vendor base. – But these are done to the expense of our supplier’s profit margins, making the business less attractive and putting the long term relationship at risk. – In order to achieve the challenging target for 2010, and to make the relationship with partners sustainable, a co-development activity is necessary between XXX and Vendor – This means starting the project NOW so as to achieve results for the FUTURE Objective: – Define a systematic and easy to use process to do the co-development and implementation of saving generation activities – Standardize the implementation to all key vendors and share the learning to other commodities and across XXX Approach: – Use the PDCA close loop process – Use existing and available user friendly tools and templates 3 Subject / Department / Author - February 2, 2013
  4. 4. 2. S4 Framework Flow Definition Goal Generation of New and Breakthrough CReW Cost Reduction Workshop Concepts and IdeasPlan Aligning Expected Results with the PRoM Price Road Mapping Implementation Plan Getting the Top Management BOM Buy Off Meeting Commitment on the ActivitiesDo Line Implementation & Defining the Detailed Operational Plan by LIFE Plan the Project Owners Full Execution Plan Periodic Progress Update – PLUS Progress Level Update Status Done on the OPERATIONAL LevelCheck Periodic Progress Update – QBR Quarterly Business Review Done on the STRATEGIC Level Sharing the Approach and Learnings with CTSB Commodity Team Steering Board the Other Commodity Teams Making the Savings Results Official and CST Cost Savings Tracker TransparentAct Sharing the Approach and Learnings with CTCM Commodity Team Core Meeting the Other XXX Assembly Sites Sharing the Approach and Learnings 4 ESWY Excellence Starts With You within theAuthor -Community 2013 XXX Subject / Department / February 2,
  5. 5. Cost Reduction Workshop CReW Initial action is to do BrainstormingPlan Session with the PRoM Key Stakeholders BOM 1. IdeaDo Generation LIFE Plan A list of activity is generated 3. Project PLUS based on the PrioritizationCheck initial ideas QBR CTSB Priority is set based CST on theAct degree of CTCM Difficulty and 2. Activity Possible ESWY Benefits 5 Consolidation Subject / Department / Author - February 2, 2013
  6. 6. Price Road Mapping The TRENDS would show 1. Trends the savings effect to price as activities are implemented and closed CReWPlan PRoM BOMDo LIFE Plan PLUSCheck QBR CTSB CSTAct CTCM The defined actions, with deadlines and owners, would drive the 2. Timing savings and these are shown as an ESWY 6 “inverted” Gantt Chart 2, 2013 Subject / Department / Author - February
  7. 7. Buy Off Meeting CReW CharterPlan PRoM BOMDo LIFE Plan PLUS TopCheck Management QBR from both parties would CTSB sign and approve the CST Charter toAct signify CTCM Commitment ESWY 7 Subject / Department / Author - February 2, 2013
  8. 8. Line Implementation & Full Execution Plan CReW Gantt ChartPlan PRoM BOMDo LIFE Plan PLUSCheck QBR CTSB CST Detailed Schedule of theAct “Milestones” and CTCM “Implementation” are defined by the project teams ESWY 8 Subject / Department / Author - February 2, 2013
  9. 9. Progress Level Update Status CReWPlan PRoM BOMDo LIFE Plan PLUSCheck Punch List QBR “Punch List” is used CTSB to track the actions needed to remove CST “Show Stoppers” andAct “Road Blocks” CTCM encountered in doing the LIFE Plan ESWY 9 Subject / Department / Author - February 2, 2013
  10. 10. Quarterly Business Review CReWPlan PRoM BOMDo LIFE Plan PLUSCheck QBR QBR’s would be held on CTSB the Senior Management Level, using the Charter, CST PRoMT2, PLUS, LIFE Plan and PLUS as the KeyAct Tools CTCM ESWY 10 Subject / Department / Author - February 2, 2013
  11. 11. Commodity Team Steering Board CReW Periodic update is done during the CTSBPlan Meeting, highlighting the key achievement, with PRoMT2 and PLUS as the primary tool PRoM BOMDo LIFE Plan PLUSCheck QBR CTSB CSTAct CTCM ESWY 11 Subject / Department / Author - February 2, 2013
  12. 12. Cost Savings Tracker CReWPlan PRoM BOMDo LIFE Plan PLUSCheck The project and QBR corresponding savings would CTSB be “officially” placed in the Cost Savings CST Tracker, and theAct results reflected CTCM in the F&A reports ESWY 12 Subject / Department / Author - February 2, 2013
  13. 13. Commodity Team Core Meeting The Projects would also be shared during CReW the Commodity Team Core Meeting with thePlan Assy Sites PRoM BOMDo Key actions, LIFE Plan if any, would then PLUS be capturedCheck in the CTCM QBR minutes and parked items list CTSB CSTAct CTCM PRoMT2 and the LIFE Plan would be the ESWY key tool for sharing 13 Subject / Department / Author - February 2, 2013
  14. 14. Excellence Starts With You CReWPlan PRoM BOMDo LIFE Plan PLUSCheck QBR CTSB CSTAct CTCM Once result is achieved, recognition to ESWY 14 the Team is done via / ESWY February 2, 2013 Subject / Department Author -
  15. 15. 4. Way Forward Actions – Make a Tool Pack for the S4 – Apply to other Vendors in Packing Materials – Apply to other Commodities in BE BOM 15 Subject / Department / Author - February 2, 2013

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