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Manufacturer of Custom Foam and Rubber
Applicators
Background
The firm is a manufacturer of custom foam and rubber applicators. At certification the firm had 132 employees and annual
sales of $14.5 million.
Over the years, the firm became increasingly dependent upon a few large OEM
customers. In order to remain competitive, many of these OEMs moved their entire
operations to Asia and outsourced design, development, and product building to
offshore suppliers that have the capabilities of delivering sub-systems to
OEMs worldwide. Consequently, the firm’s parts and components sales suffered and
remained exposed to further erosion in the future.
Assistance Provided
The firm’s main concern was the purchasing function. Management was concerned
that some key polices and procedures were lacking in this area, and with the
large dollar amount this function is responsible for each year, a better
structure was needed. Thus, the recovery strategy emphasized the need to
evaluate the purchasing operation and analyze the firm's competitive bid process
with the goal of reducing costs and implementing change.
Project Results
The firm gained a number of benefits from this successfully completed project.
First and foremost, the project verified, without a doubt, the overall
purchasing function is structured and operates very well for the amount of
dollars spent annually. The project also organized and categorized the flow of
purchased requirements. The project then set in place a procedure to improve
inventory turns to 12 per year by altering the process of pulling against
blanket orders.
The firm shortly realized annual dollar savings from this project of 11
percent, and management expects this to increase once everything is in place.
Some of the savings can be passed on to customers.
The major result of the project is the confidence management regained in the
purchasing structure. This project assured management the purchasing function is
operating at optimum with the available tools and procedures now in place.
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