Tool Optimisation Automotive Manufacturer
Supplier Relationship Management
Challenge / Requirement
The client, a large specialist automotive OEM had a high usage rate for electric hand tools, with an approximate annual spend of £30,000. Due to the manual nature of the production process electric hand tools had a limited life span of approximately 6 months with constant purchase orders being placed for replacement items. The client had a strong and long standing relationship with the tool supplier who was very flexible in their approach and consistently cost efficient.
Process
Challenged with reducing the cost of hand tools the client used, the first point was to benchmark the incumbent supplier to ensure the cost of the tools purchased was competitive. The supplier was approached with the challenge of reducing the cost of replacement. Discussion focused on two aspects: how to increase the length of service for each tool; how to reduce the annual cost. A number of potential solutions were considered which offered greater efficiency and reduced cost but the chosen path involved not only changing the tools for a more robust offering, but also moving from purchase to lease.
Outcome
A number of potential solutions were considered which offered greater efficiency and reduced cost but the chosen path involved not only changing the tools for a more robust offering, but also moving from purchase to lease.
By opting for tools with greater quality and proven robustness the initial service of the tools was increased from 6 to 12 months offsetting the increased cost and ultimately offering a substantial saving to the business of approximately 15% of the annual spend.
Benefits
The tool manufacturer chosen offered a very comprehensive leasing program which enabled the supplier to manage a rolling program of service and repair (including replacement of all internal components when required) using service stock owned by the tool manufacturer. This reduced the downtime for each tool, increasing efficiency, productivity and offering a further 6% saving against the annual spend.
