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Supply Chain Cost Management: The AIM & DRIVE® Process for Achieving Extraordinary Results

Book Description

For most supply chains, cost reduction is imperative to long-term survival. Yet identifying the costs that can be eliminated – and then doing so effectively – can prove impossible without the right method. This book introduces the same process the author has used to save companies like IBM, Kodak, and DuPont billions of dollars, simply by harnessing the knowledge of suppliers. Using real-life case studies and examples, the book takes readers step-by-step through the process, showing them how to move beyond negotiation and:

* identify critical costs in the supply chain * measure secondary and tertiary costs * develop strategic options * reduce, change, or eliminate activities that produce costs * implement an action plan * verify the plan with cost monitors * continually improve and modify the process

The book gives readers everything they need to implement this powerful system, and bring genuine and permanent savings to their company

Table of Contents

  1. Copyright
  2. Praise for Supply Chain Cost Management
  3. Foreword
  4. Preface
  5. Acknowledgments
  6. Introduction
  7. The AIM & DRIVE Process of Cost Management
    1. Before the Breakthrough
    2. Historical Perspective
    3. What Is Cost Management?
    4. The Eight-Step Process: An Overview
    5. Preparing for an AIM & DRIVE Exercise
  8. Agreeing on the Need to Manage Costs
    1. What Is a Strategy?
    2. Do We Really Need Strategies?
    3. The Best Have to Get Better
    4. Demonstrating Leadership in the Supply Chain
    5. Facilitating the Right Decision-Making Process
    6. Building Credibility and Respect
    7. The Goal of Cost Management Strategies
    8. Preparing for a Cost Management Strategy-Building Session
    9. Determining Team Goals
    10. The Master Worksheet
  9. Identifying Critical Costs in the Supply Chain
    1. Map the Process
    2. Select Critical Costs to be Managed
  10. Measuring Secondary and Tertiary Costs
    1. Methods of Measuring Costs
    2. Allocation-Based Systems
    3. Developing Cost Drivers in Formula-Based Costing
    4. Writing a Formula for Each Secondary or Tertiary Cost
    5. Case Studies
  11. Defining the Key Cost Drivers and Developing Strategic Options
    1. Review the List of Current Cost Drivers
    2. Selection of the Key Cost Driver by Observation
    3. Develop a Model to Select the Key Cost Drivers
    4. Weighted Value of Cost Drivers
    5. Potential for Improvement
    6. Developing Strategic Options for Selected Cost Drivers
  12. Reducing, Eliminating, or Changing Activities That Cause Costs
    1. The Risk-Return Model
    2. Identifying Constraints
    3. Creating Strategy Statements
    4. Evaluate Risks and Benefits from Different Perspectives
    5. Quantitative and Qualitative Factors
    6. Leveraging Ideas
    7. Prioritizing Strategies for Implementation
  13. Implementing an Action Plan
    1. Ingredients for a Good Implementation Plan
  14. Verifying the Plan with Cost Monitors
    1. Appoint a Project Coordinator
    2. Hold Weekly or Biweekly Meetings or Conference Calls
    3. Attend All Meetings and Conference Calls—on Time, Every Time
    4. Avoid Getting Dragged into Negotiations
    5. Monitoring Performance
    6. Documenting Savings
    7. Documenting Qualitative Benefits
    8. Review the Goals Specification Worksheet
    9. Modify Action Plans
    10. Grading the Team
    11. Sharing the Learning Process
  15. Eternally Improving and Leveraging the Process
    1. Expanding the Strategy
    2. Leveraging Ideas
    3. Critical Success Factors
    4. Measures of Success
    5. Rewarding Success
  16. Index