Managing Input Cost Volatility - Indian Machine tool perspective
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Transcript of Managing Input Cost Volatility - Indian Machine tool perspective
1 Managing Input Cost Volatility
M Hariharan
Director
Savoir faire Management Services Pvt Ltd
Navi Mumbai
2 2 Agenda
Changing Cost Paradigm
Sources of Cost Drivers
Volatility
Thinking Big
3 3
Changing Paradigm of Cost
C + P = S Blessing of Customer – Cost Reimbursement Model
S - C = p
Curse of Competition and Inefficiency
S - P = C Customer Value Creation and Economic Value Creation
Allowable Cost
H
4 4
Sources of Cost Drivers
Economic factors
Design
Operational
Attitudinal
•Price level changes •Government Policies •TBL Impact
•Product •Process •Supply Chain •Organisation Structure
•Muda •Mura •Muri
•Performance Measures •Myopia •Budget Rigidity
5 5
Volatility – The reality bites
It’s the New Normal
What is true for a swarm is true for a bee
Struck between rock and hard place
6 6 Volatility and the Sources of Cost Drivers
Economic factors
Design
Operational
Attitudinal
The New Normal
Parts Proliferation
Yield and Rejects
?????
7 7
Volatility – Possible Response
Hedging
Strategic Sourcing
Stock and respond
Size does matter
8 8
Thinking Big
Understanding our Supply Chain Status
Swarm and the Bee
Addressing Economic Drivers
Addressing Design Drivers
Addressing Operational Drivers
Addressing Attitudinal Drivers
9 9
Original Quote
What is not good for the swarm is not good for the bee – Marcus Aurelius
10 10
Economic and Design Drivers
Economic Drivers
Consolidated Cluster Sourcing
Strategic Source Investments
Design Drivers
Cluster Design Initiatives
Inter-company products Parts commonisation
Operational Drivers
Joint Competitiveness Initiatives
