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RNM is a Industrial Engineer, Engineering Manager, Product Engineer, Engineering, Engineering Failure Analysis, Accident Reconstruction Consultant, Specialist, Forensic Analysis with world-class expertise in project management, product development, market development, technology based products, hybrid vehicle motors, distributed energy system PM generators, light and heavy duty vehicle electric systems.
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As supervisor of materials engineering, it was my responsibility to come up with annual cost saving/reduction programs of 3-5 % of the total material budget. This was a difficult goal to meet as new and redesigned products were not frequent and suppliers were being squeezed to the point of not being able to meet our requests for additional concessions. A new strategy was needed to uncover hidden cost savings without bankrupting our suppliers. The solution was a math-based analytical tool, linear programming, which allows one to find the optimum solution to a multi-variable problem.
To show management how linear programming could be used to optimize cost reduction, I chose, as an example, copper conductors which we were buying from a single supplier in about 20 sizes at a cost of approximately $1,800,000 per year. As the first step, I solicited bids from a broader supplier base to increase competition between suppliers and to discover where new pricing was attractive in comparison to the present prices.
The next step was to use linear programming to optimize the cost reduction in purchasing copper conductors. I fed the program with the quote information for each conductor size and for the volume purchased, and from whom purchased. The program then went thru iterations of total cost based on the suppliers selected and the percent purchased, from each, conductor size, and annual volume. Some manual adjustments were made to the input to minimize single sourcing.
The results of the analysys were outstanding, showing the company how they could reduce the cost of copper conductor upwards of $500,000 per year, or 28%. The first year savings was higher than to be expected because the increased number of suppliers used in the analysis. In subsequent years we can eliminate low performing suppliers, add new domestic suppliers, and include foreign manufacturers of copper conductors.
This modern analytical tool can be applied to a broad range of problems in many different industries.
Read other articles by this KKAI Associate:
Electric Propulsion System Team
| Industrial Engineer, Engineering Manager, Product Engineer, Engineering, Engineering Failure Analysis, Accident Reconstruction Consultant, Specialist, Forensic Analysis, project management, product development, market development, technology based products, hybrid vehicle motors, distributed energy system PM generators, light and heavy duty vehicle electric systems. | |
| Resume of SPC | mechanical engineer, control systems consultant, engineering consultant, engineering failure analysis, specialist, forensic analysis investigation expert witness testimony, engineering consulting services |
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Kevin Kennedy & Associates, Inc.
Rapid Response Engineering® Solutions
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