COP - Cost Optimization Program

COP
COST OPTIMIZATION
PROGRAM
Alexandre Kalup Vasconcelos
MBA Exe FIA T39

AGENDA
1. Introduction
2. Process
3. Behavior
4. System
5. Case study – Behr Brasil
COP

1.INTRODUCTION
1.1 Crises history
1.2 Definition
1.3 Concept COP

1. INTRODUCTION
1.1 CRISES HISTORY
COP

COP
1. INTRODUCTION
1.1 CRISES HISTORY

2011
CRISE EUROPEIA
O Velho Mundo , berço do Iluminismo,
Renascimento, Ideologias, filosofias e a
transformadora Revolução Industrial , diante do
mundo garantiu o status de uma região de alto
desenvolvimento econômico e bem-estar social .
Mas a imagem construída ao longo dos séculos
agora está associada a turbulências de mercado,
ao descontrole das contas públicas e políticas
assumidas que conduziram a zona do euro para
uma crise financeira que é muito mais grave do
que imaginaram e de difícil superação a curto e
médio prazo. Desemprego, altos impostos, preços
elevados e medidas de austeridade mexem com
a vida dos europeus.
COP
1. INTRODUCTION
1.1 CRISES HISTORY

COPDécadas 50 70 9060 80 00
Dutra Vargas Jucelino Janio Ditadura Sarney Collor FHC Lula
1. INTRODUCTION
1.1 CRISES HISTORY

“Isto não é o fim. Nem mesmo
é o começo do fim. Talvez seja
o fim do começo” - Winston
Churchill.
COP

1. INTRODUCTION
1.2 DEFINITION
COP
1. Operation: Increase company productivity
2. Market: Improve company competiveness
3. Customer: Achieve customer satisfaction
4. Sales: Increase company business
5. Financial: Increase company profitability
Cost Optimization Program
FIT TO COMPETE

COP
1. INTRODUCTION
1.3 CONCEPT
PROCESS
Development steps
Initiatives
Target Setting
BEHAVIOR
Organization
Mindset Change
Communication
SYSTEM
Data base
Progress Reports
Continuous system
management

2.PROCESS
2.1 Process Flow
2.2 Idea Generation
2.3 Idea Data Sheet (IDS)
2.4 Development Steps (DS)
2.5 Initiatives
2.6 Target Setting

"Nós sempre podemos fazer
melhor: nós sempre podemos ir
mais longe; nós sempre
podemos encontrar novas
possibilidades. É preciso estar
sempre fazendo e progredindo"
Henry Ford.
COP

2. PROCESS
2.1 PROCESS FLOW
Idea
Generation
Several sources
and activities
generate new
ideas.
Idea
Description
The idea author
fulfill the idea
data sheet (IDS)
and input in the
system.
The idea owner drive
the idea
implementation
across the
development steps
(DS)
Idea
Development
DS1
DS2
DS3
DS4
DS5
DS6

BEST
PRACTICES
2. PROCESS
2.2 GENERATING IDEAS
 Resources - materials, people and
information available to perform the
work - after all are the people who
innovate, not companies.
 Techniques - skills in managing
innovation in the different levels of the
organization and focused on the design,
development and implementation of
creative ideas.
 Motivation - the most important
component of the catalyst actions for
innovation.
 Support Organization - recognition
of creative work, mechanisms for
developing new ideas, limited number of
hierarchies, flexible rules and less
bureaucracy, Management flexibility,
acceptance and encouragement of new
ideas, favorable relationships, dialogue,
trust and exchange of experiences
between members and staff.
INNOVATION

2. PROCESS
2.3 IDEA DATA SHEET

DS1
Registered idea
DS2
Investigated idea
DS3
Validated idea
DS4 - Prepared
idea
DS5 - Idea
Implemented
DS6
Saving
Idea validated!
Idea not double counted!
Idea Owner defined!
Technically feasible!
Analysis of profitability!
Approval of the customer!
Implementation decision!
Using the Budget set!
Approval of the client to invest!
Design / Work Plan / List organized!
Revised calculation of production costs!
Change of production / vendor made!
Change Design / Work Plan revised!
Parts List active!
Stock reset!
Saving confirmed!
2. PROCESS
2.4 DEVELOPMENT STEPS

Initiatives Responsible Description
COM Purchasing
Material cost reductions due to supplier
commercial negotiations, resourcing
activities and technical modifications
PRO-1 Product Engineering
Material cost reduction due to techncial
modifications, changes of specification,
development hours optimization
PRO-2 Process Engineering
Process cost reductions due to men
power (blue collar) and machine cost
optimization
PLA Plant Production
Production cost reductions due to
maintenance, quality and losgistics
optimization
ADM Administrative
Administrative cost reductions due to
men power (white collar), material office
and service expenses
SAL Sales
Sales cost recovery with the customers
due to material cost, labor and
overheads increase
TOTAL
COP
2. PROCESS
2.5 INITIATIVES
DS1
DS2
DS3
DS4
DS5
DS6

2. PROCESS
2.5 INITIATIVES
Initiative Guideline
 To clarify all initiatives, the program has a guideline
 The initiative guideline explain the main rules of
COP
 The guideline contain the cost calculation scheme for
each kind idea
 The guideline is built by COP Head and Controlling
area
 The guideline is signed by the CEO and all Manager
staff
 The COP team is trained to apply the initiative
guideline
 The guideline is a key document to avoid
misunderstanding and conflicts

Split in functional Initiatives LONG TERM goal 2013-2015
Initiative Managers 2013 2014 2015 Total
COM Purchasing 2,1 2,5 2,7 7,3
PRO-1 Engineering1 0,5 0,6 0,6 1,7
PRO-2 Engineering2 0,7 0,8 0,9 2,4
PLA Plant 0,7 1,0 1,1 2,8
ADM Administrative 0,0 0,0 0,4 0,4
SAL Sales 0,6 0,8 0,6 2,0
Σ CEO 5,0 6,0 6,8 17,7
2. PROCESS
2.6 TARGET SETTING
SMART
Specific
Measurable
Attainable
Realistc
Timely
 COP Head is the main responsible to assure the target setting
process while the CEO is the major responsible for the company
target achievement supported by hisher Managers.

BEST CASE
DS2 – DS6
FORECAST
DS4 – DS6
2. PROCESS
2.6 TARGET SETTING
DS1
DS2
DS3
DS4
DS5
DS6

January
current year
100% in BC
situation and
30% in FC
April
current year
140% in BC
condition and
50% in FC
July
current year
90% in FC
situation
December
current year
100% in FC
condition
September
previews
year
Starts to fill
up ideas
YEARLY
MILESTONES
Workshops brainstorming
starts take place
Year end rally
Speed up investigation and
validation process
Speed up implementation
process
2. PROCESS
2.6 TARGET SETTING

3.BEHAVIOR
3.1 Organization
3.2 Mindset Change
3.3 Communication

A clareza sobre os valores e
comportamentos não adianta
muito sem estímulos. Para que os
valores realmente signifiquem
alguma coisa, as empresas devem
recompensar as pessoas que os
demonstram e punir as que não
os demonstram. Acredite-me, isso
é muito importante para a
vitória” Jack Welch (2005). COP

Line
Managers
Manager
CEO COP Main Sponsor
COP Head
COP Initiative Responsible
3. BEHAVIOR
3.1 ORGANIZATION

Full time
Part time
HEAD
COP
PU
Manager
Engineering
Manager
Plant
Manager
ADM HR
Manager
Sales
Manager
COM PRO PLA ADM VEN
Coordinator Coordinator Coordinator Coordinator Coordinator
COM PRO PLA ADM VEN
Controlling
COP
3. BEHAVIOR
3.1 ORGANIZATION

33
Responsible to drive the process in his initiative in order to achieve the company
goal supported directly by the Initiate coordinator
Answering directly to COP Head, is responsible to assure the COP controlling
guideline application and resp. for the system administration. Special reports
construction and new users COP training are also tasks below this function.
The idea owner is in charge of idea development from step 2 till step6. The timing
plan and saving calculation fields are under his responsibility.
Responsible for the initiative tracking in the idea level, system monitoring
assuring all data entering, up-to-dateness, data quality, tracking of timelines and
support the project teams. Define the idea owner, promote workshops and use of
the best practices are tasks of this function.
Responsible to participate of COP forums supporting the Initiative responsible to
take decisions and achieve the company goal
Main responsible for the program management, driving the process, monitoring
the progress, preparing Board reports, inform and motivate the organization
The idea author is responsible to fill out the idea registering as much as possible
details in the data base available
COP Steering
Committee
COP Head
Initiative Coordinator
Initiative Responsible
Idea Owner
COP Controlling
Idea Author
COP
3. BEHAVIOR
3.1 ORGANIZATION

The Six Stages of COP Implementation
TO BE
DESIGNED
DESIGNED INSTALLED
MECHANICAL
COMPLIANCE
UNDER-
STANDING
OWNERSHIP /
USAGE
0 1 2 3 4 5
Performance/Sustainable
•Accurate and
relevant
information is
displayed to a
level of at least
90% compliance
•The system
element is
monitored
•Action are
being taken
•Information / data
from the system
element is used to
raise awareness of
problems /
opportunities
•Action are being
taken to address
variations from plan
•Individuals
involved in its use
can train others
•Examples of
improvement are
communicated
and learning are
shared
•Individuals
demonstrate
continuous
improvement
•Actions being
used to drive the
business forward
•Area manager
understands and
accepts the need
for the system
element
•Design and
format of system
elements have
been agreed
•The element
has been
introduced and
is in operation
•Individuals
involved with the
element have
had training in
it’s use and
purpose
•The element is
easily available
for all
3. BEHAVIOR
3.2 MINDSET CHANGE

Information
Change
of mindset
Motivation
Inform about objectives,
organization, structure &
progress and results of
COP
Motivate to identify with the
objectives of COP and
contribute to the success of
the program
Enhance cost optimization
oriented thinking and
behaviour throughout the
organization
3. BEHAVIOR
3.3 COMMUNICATION

Information
Change
of mindset
Motivation
COP Target
Monthly results
Who is involved
Best practices
Milestone progress f-up
Award program for best ideas
Sucess case studies publication
Target achieved celebration
Service Promises
Why COP?
Campaign avoiding waste
Awareness!!!
3. BEHAVIOR
3.4 COMMUNICATION

4.SYSTEM
4.1 Data base
4.2 Progress Reports
4.3 Continuous Management

“O que separa os inventores dos
inovadores é a capacidade de
pensar em todas as condições e
conexões necessárias para
permitir que uma solução se
encaixe perfeitamente no
compasso diário de quem a
utilizará. Isto é pensamento
sistêmico.” Mattew E. May
(2007) COP

4. SYSTEM
4.1 DATABASE
How to track hundred ideas with more than 20 edit fields
at the same time, across 6 development steps for 6
initiatives in 2 economical scenarios *best case &
forecast, taking in account at least 2 years of life time
and generating 10 different reports during 52 weeks
per year with the minimum resources?

4. SYSTEM
4.1 DATABASE
1. The system is the third key success factor for COP
2. Just with the tool system, we are able to manage the COP
process and drive *not just control, the company behavior
3. The system is responsible for the whole data bank management
4. All reports are generated automatic with option, manual by
demand
5. Just with a good system installed, the COP dedicated team can
be reduced
6. Working with a system, you can manage different plants locally
and worldwide
7. Software recommendation: use WEB environment able to
communicate and set on alarms for DS approvers by email as
well as extract reports
8. Alternative: EXCEL *not recommended

4. SYSTEM
4.2 PROGRESS REPORT
 The progress report is the main tool for the program tracking
and controlling
 Main reports:
COP Total
Initiative level
Idea level
Pocket card
TOP10 Potential BC (DS2-6)
TOP10 Potential FC (DS4-6)
TOP10 Overdue Milestone FC
TOP10 Overdue Milestone BC
TOP10 Potential DS6
TOP10 Potential DS1
TOP10 Audit checked red

COP- Manager F-up
(area related)
LEVEL2
MANAGER
Coordinator
Idea Owner
* Agenda: F-up cockpit, action plan, bridge of the last two weeks and preview next
COP- Team F-up
(ratio project related)
LEVEL3
COORDINATOR
Idea Owners
Team members
* Agenda: Track ratio ideas, f-up action plan, bridge of the last week and preview next weeks
LEVEL1
COP- Board F-up
(initiative related)
PresidentCEO
Managers
* Agenda: F-up cockpit, bridge of the last month and preview next month
Once a
month
Each
two
weeks
Weekly
4. SYSTEM
4.3 CONTINUOUS MANAGEMENT

6.CASESTUDY
BEHRBRASIL
6.1 BEHR Group
6.2 Project P2010
6.3 Main Challengers
6.4 Actions & Results

Welcome at
Behr Brasil
Updated
29/11/11
Behr GmbH & Co. KG, Stuttgart, is a systems partner
of the international automotive industry. A specialist
for automotive air conditioning and engine
cooling systems, the Behr Group is one of the world’s
leading manufacturers and suppliers of original
equipment for light vehicles and trucks. Group sales
in the 2010 business year came to around 3.3 billion
EUR. Currently, Behr employs some 16,500 staff at 9
development locations, 22 production sites and 10 joint
ventures worldwide.
6. CASE STUDY
6.1 BEHR GROUP

45
6. CASE STUDY
6.1 BEHR GROUP

46
BEHR’S MARKET STRATEGY
Fully competitive
Cost
Quality/Reliability
Global presence
No. 1 worldwide
Technology
Customer support
Performance
Leadership
6. CASE STUDY
6.1 BEHR GROUP

47
6. CASE STUDY
6.1 BEHR GROUP

48
6. CASE STUDY
6.1 BEHR GROUP

49
6. CASE STUDY
6.1 BEHR GROUP

COP
6. CASE STUDY
6.2 PROJECT P2010

COP
6. CASE STUDY
6.2 MAIN CHALLENGERS
Process not defined (no step development implemented);
Lack of understanding of program objectives and responsibilities of the team;
Meeting with many conflicts and poor performance;
Assertiveness of implementation dates low;
Forecast equivocal results (lack of Best Case Scenarios and Forecast);
Lack of monitoring and control of the program as a whole;
Lack of alignment between major areas: Eng, Comp, Log, Wed, Prod, Control, Sales;
Problems of logistics management during the implementation of new ideas (old stock);
Lack of rules for saving calculation - no "guideline" defined;
Lack of transparency in the disclosure of the results;
Lack of a common goal, involving the entire management and board;
Lack of a budget (budget) to specific activities of optimizing series of projects;
Lack of clear knowledge about the rules and stages of approval and modification of customers;
Several ideas implemented without the approval of the Quality;
Lack of alignment with the internal program "Suggestions for Improvement";
Lack of motivation of the supplier to suggest technical improvements;
None identified motivation program for employees and suppliers;
Lack of dedicated staff;
Lack of priority in the daily agenda of Managers and Directors;
Process setting goals not aligned with the mission, vision, values the company;
Establishing and division goals inappropriate;
Lack of a communication plan to inform, motivate and emphasize organizational culture
The lack of a prize for the best suppliers;

PROCESS
 Recovered the suggestion program
credibility
 Suppliers deep involved in the process
 Process well defined and trained
 Initiatives covering all cost center areas of
the company – value chain
 Best case and Forecast scenarios well
clarified
 Target aligned with Mission, Vision and
Values
 Define long term target at least 3 years
ahead
 Splited the target between the initiatives
and the responsible areas
 Kept the target year milestones on track
6. CASE STUDY
6.3 ACTIONS & RESULTS

BEHAVIOR
 Structure well defined
 COP Team function roles known by all
organization
 Management level deep involved and
committed
 President speech emphasizing the COP
importance for the whole company,
FREQUENTELY
 Developed a communication plan
approaching the 3 main communication
clusters
 COP Target milestones dates and results
frequently informed
 Built a good award program to compensate
the best ideas and higher savings
6. CASE STUDY

SYSTEM
 It was a key factor to connect Process
and Behavior
 Software developed in WEB
environment, with direct link to the
email application
 The administration under COP
Controlling responsibility
 Continuous management system
implemented (high dicipline)
 The idea data sheet converted in
electronic data
 Suggestion Program changed working
electronic in the same base of P2010
 Standard reports created - Not accepted
parallel reports out of the system (use
just one source)
6. CASE STUDY

 More than 600 ideas implemented per year (just Behr Brasil), 3.000
worldwide;
 5% of cots reduction achieved over net sales per year, 450 MEUR
worldwide;
 Competitive capacity improved with margin increase;
 Customer satisfaction improved;
 3 Awards of cost reduction won from three different customers;
 Mindset changed “each cent counts!” cost reduction culture;
 In 3 years, 3 cars given by Behr Brasil Award Program;
 End 2010, the program was extended for more 3 years.
6. CASE STUDY

COP
CONTATO
Alexandre Kalup Vasconcelos
Phone: (11) 99 629 5086
Alexandre.Kalup@gmail.com
Skype:ale30071974
OBRIGADO

COP - Cost Optimization Program

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