Who's got strategic sourcing on the brain?
Staff -- Purchasing, 6/3/2004 2:00:00 AM
DuPont has set a goal to reduce fixed costs by $700 million in 2005, with $375 million of that coming by reducing external spending in areas such as contract services, supplies procurement, telecommunications and information technology expenses. DuPont will target both SKU reduction and "sourcing optimization" to achieve the savings.
Toro recently credited a new method of strategic sourcing for part of its improved profitability. The new sourcing strategy takes into account all phases of products' lifecycles, from development to production and delivery and reconciles the conflicting goals of individual departments, such as the purchasing department's desire to buy parts in bulk to save money and plants' desire to keep inventories lean. Toro also developed a system for its engineers to see what kinds of parts were already being used in existing products in order to use the same kinds in new products to simplify and cut the costs of inventory management.
Allied Motion Technologies is focusing on strategic sourcing after strong financial results in the first quarter. Dick Warzala, president of the company, said in a recent statement, "A strong emphasis on reducing product costs through strategic sourcing and product re-design efforts will improve our cost effectiveness and further enhance our ability to win new business and fuel our internal growth engine in the future."
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