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Reference Story SITUATION Materials Manager, power supply mfg. company CRITICAL ISSUE Difficulty controlling shortages REASONS Frequent engineering changes and two different bills of material (one for engineering and one for manufacturing) VISION He told us he needed to be the control point for implementing engineering changes. This would allow him to simulate the impact in advance of the change. He also needed both engrg. and mfg. to operate from the same bill of material. __ PROVIDED We provided him with those capabilities RESULT Over three years he has had no more than 18 parts short at one time out of 3500 parts. * 第二十八页，共七十七页。 What’s It Worth to Reduce Inventory? Cash - Inventory requires and ties up cash Cash needlessly tied up in inventory reduces cashreserves or requires additional debt. Profit - Carrying costs reduce profits Carrying costs increase operating costs, which reduce profits. Carrying costs include: Storage facility costs Staffing and handling costs Insurance Taxes Pilferage Damage Obsolescence . . . and more. Inventory carrying costs are usually at least 25% * 第二十九页，共七十七页。 What’s It Worth to Reduce Receivables? Cash! It generates cash. Receivables are simply no-interest loans to yourcustomers Cash you could use to fund your business Days in excess of terms raise your costs and increase your risk of cash loss. You have to borrow less (usually) Interest expense is reduced and most liquidity ratios are strengthened. Receivables can be controlled by setting a “Days of Receivables” goal and monitoring performance to achieve it. * 第三十页，共七十七页。 Value Measurement Elements What will be measured? Who is responsible? How much is possible? What capabilities will be needed? When will this investment pay for itself? * 第三十一页，共七十七页。 Power Sponsor aka the “Vice President of Change” Typically an innovator or early adapter Enough clout to get it if they want it, regardless of job title Willing to introduce you to anyone you need to talk to Willing and able