Three Key Aspects of Beating Inflation

As president of Fulcrum ConsultingWorks Inc., Rebecca A. Morgan works closely with companies, creating operational strategies, tweaking process management and mastering the most progressive operations analysis techniques and production systems in use today. According to Morgan, precasters need to consider at least the following three business components when creating a strategy for beating inflation:

Price Paid:
• Price negotiation potential (via buying groups, better negotiation, etc.). Work with suppliers to develop options that work for everyone involved in the transaction
• Spec changes. Work with suppliers to understand what spec changes could do to lower prices and evaluate which (if any) you can agree to; over-spec’d is a frequent case of costs being higher than they need to be (in any industry), says Morgan.
• Different aspects of value. Such as bulk instead of bags, bags instead of bulk, different payment terms, different delivery locations or other logistics.

Usage:
• Reduce “unused” or scrap.
• Increase yield so it takes less to do the same thing (by using a different grade or considering other operating conditions).

Total Cost of Ownership:
• What can suppliers do to help you reduce labor costs or increase yield or reduce scrap? Consider different product handling considerations, which are often a source of these kinds of savings. “Price may be the same or even higher,” says Morgan, “but total cost to the using firm can be lower.”