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Consulting »Operations »Supply Chain Cost Reduction

Cost Reduction

In tough economic conditions, it is essential for an enterprise to look at innovative ways to cut costs without cutting corners. Efficient management and a better understanding of supply chain costs put the enterprise in a better situation to review and, if necessary, realign and optimize the supply chain to reduce costs without compromising on the value. Aqua MCG partners with its clients to review their supply chains to design leaner and cost effective procurement, manufacturing and distribution models.

With ever more demanding and less loyal customer, global sourcing to low cost countries, lessening profit margins and shortening of product life cycles, firms across the world have taken cost reduction in a big way to stay competitive and at the same time maintain the expected service level to the customers. Supply chain has a huge role to play in achieving the objectives of the firm, be it a manufacturing industry like textiles or automotive industry or services industry like telecommunication or media & entertainment industry, and presents tremendous opportunities to the firms when it comes to cost reduction.

Some of the supply chain domains where cost reduction can be achieved are:

Domain	Capabilities	Decision Drivers
Product Development	Outsourcing enablement	Analyze core competencies Product strategic fit Capital expenditure investment analysis Internal cost effectiveness for manufacturing
Product Development	Vendors and supplier Selection	Cost effectiveness Network Optimization Supplier capability and readiness assessment
Sourcing and Procurement	Low cost country sourcing	Procurement easiness Rules and regulations of the sourcing country
	Make or Buy decisions	Component’s impact on the customer experience Component clock speed Capabilities of existing suppliers Component integral to the element or not
	E - procurement decisions	Options available and their readiness Lead time reduction and cost trade off assessment Internal infrastructure readiness to support
Logistics and Distribution	Determining number of facilities such as plant and warehouses	Service level improvement analysis Inventory costs associated with each extra facility Overhead and setup costs Transportation costs assessment
	Direct shipment option assessment	Lead time reduction analysis Transportation costs
	Warehouse location determination	Geographical and infrastructure conditions Natural resources and labour availability Local industry and tax regulations
	Centralized Vs decentralized management	Safety stock maintenance Overhead costs Economies of scale Lead time Service level
Sales and Demand fulfilment	Inventory management	Customer demand prediction Supply mismatch Lead times analysis Service level requirement by the customers Costs including order cost and inventory holding cost
	Forecasting	Choosing the right forecasting method and tools vis-a-vis judgement method, market research method, time series method or causal methods. Complexity Vs time trade off Forecasting in case of new product development
	Sales and operations planning	Choosing the order-to -be -completed strategy vis-a-vis made-to-stock, made-to-order, assemble-to-order strategy Minimizing Inventory levels through Inventory management, control Capacity planning such as RCCP, MPS, MRP, CRP etc. and production scheduling Quality management system such as process design, process capability and shop floor related quality control options in order to adhere to customer service levels
Information Technology	Automation in distribution and material handling	Time saved Cost incurred analysis Meeting customer’s service level expectation

We at Aqua MCG, understand the need of firms to reduce costs and offer capabilities which are entwined around supply chain domain expertise. Aqua MCG provides the standard framework around which our services are built and can be as encompassing as ranging from supplier and vendor management to operations scheduling and planning, from network modelling and optimization to after sales service and support. Our capabilities and solutions in the above domain areas have proved to have a tremendous impact on the firm’s cost reduction drive.

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