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3 Ways to Attack The #1 Cost Driver

Posted by Richard Turner on Feb 9, 2017 10:59:28 AM

When it comes to controlling costs in business we seldom use the obvious tactics, especially if the solution relies on cross-departmental efforts. It is always easier to control your own department’s costs from within than to gain consensus from other departments. As a result, we default to what we know best, standard department cost reductions. But does this really make the biggest impact for the company? 

One example is Direct Material Cost, the cost of raw materials and components used to create a product. It is the most significant cost in manufacturing and can represent 50% of revenue for manufacturing companies. Yet it is often ignored as an area of cost reduction, or worse each department will attempt to reduce this cost independent of the other groups resulting in marginal cost benefits and unsustainable solutions.

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Topics: Part cost, Manufacturer Parts, Classification, Duplicate Parts, Governance

3 Approaches to Complexity Reduction

Posted by Richard Turner on Jan 26, 2017 10:14:08 AM

Reducing complexity of your direct material supplier parts can help drive significant savings within your company. Similar to our recently published blog which described the importance of conducting internal price benchmarking activities as a prerequisite to competitive benchmarking on a company’s direct material purchases. In both scenarios it’s surprising what you find when you are able to cleanse and enrich your purchase part data,  it can expose a variety of opportunities to reduce direct material spend without having to make major changes to your products. To reduce the complexity, we recommend grouping your direct material spend into these 3 groups:

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Topics: Part cost, Governance, Benchmarking, Classification, Part Cleansing, Manufacturer Parts, Data Cleansing

2016 Top Data Quality Blogs

Posted by Alison Luna on Dec 21, 2016 1:17:00 PM

 

Convergence Data knows the importance of your part data. We know that part data is a core asset for your company, and the quality of that data is fundamental to the health of the business and the bottom line. Start the new year right with a review of the best ways to get your data clean in 2017. Below is a recap of the top 2016 data quality blogs we published to help you stay on top of your company’s core assets in the New Year.

 Top 5 Data Quality Blogs of 2016:

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Topics: Data Cleansing, Governance, Manufacturer Parts, Part Cleansing, 2016 Top Blogs, Part cost, Duplicate Parts, Benchmarking, Cleansing Data, Classification

Effective Price Benchmarking

Posted by Richard Turner on Dec 8, 2016 11:15:00 AM

Everyone is trying to determine what competitors are charging for their products through competitive benchmarking but will that really help you make a bigger profit? Maybe, but the real gold is in your existing purchase parts. Use the data you already have in house and compare purchased part costs that your company has incurred over the past two years. This data will allow you to truly increase your profit regardless of competitor pricing.   Price benchmarking looks outward but for optimal profit you must first look inward.

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Topics: Part cost, Benchmarking, Cleansing Data, Product Analytics, Manufacturer Parts

4 Key Factors to a Successful Part Cleansing Project

Posted by Alison Luna on Nov 9, 2016 10:47:45 AM

As Steven Covey noted in 7 Habits of Highly effective people  you should begin with the end in mind.  When starting a direct materials data cleansing project, you need to ask yourself, what is the goal of improving the direct materials data?  Cost savings? Sourcing efficiency? Improved insight through reporting and analysis?  To answer these questions and achieve success, engineering and procurement need to work together to obtain the answers. First you need to know what are the overall company goals? From there all the following questions can be answered.

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Topics: Governance, Classification, Data Cleansing, Product Analytics, Manufacturer Parts

4 Critical Steps to Control Duplicates

Posted by Richard Turner on Jul 14, 2016 9:22:25 AM

Duplicate parts are the software bugs of the data world, hard to identify without specific tools and processes in place. If these “bugs” are not found in implementation they can be ultimately time consuming and costly down the road.  For these reasons it is crucial to get ahead of the issue as soon as possible, optimally during a data migration project or switch to a new platform.   For example, an SAP ERP data migration involving cleansing and classifying purchased parts from multiple legacy systems from US and International locations would be the perfect time to detect, isolate and deal with duplicate parts. The best case would be to have lead time of 6 to 12 months prior to the actual cutover to clearly find these duplicates and to give enough time to formulate the best plan to deal with these duplicates. Some may want to remove duplicate parts all together, while others may want to look for ways to consolidate and rationalize this data to help mitigate duplicate inventory, still others may want to associate them for purchaser’s reference for ordering and price comparisons.  Regardless of final goal for your company you first need to identify them through these steps.

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Topics: Data Cleansing, Duplicate Parts, outsourcing, Classification, Manufacturer Parts

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