What is the net impact of the firm’s implementation of its value analysis and business process reengineering programs?
) Caravan Engineering is a leading global manufacturer of brake shoes. As competitors started catching up, the firm instituted a value analysis program, came up with new drawings and specifications for its brake shoe components, and selected suppliers (from a worldwide pool of 1000 suppliers) who offered the best price. The firm also embarked on a business process reengineering (BPR) program and identified new sets of core competencies in marketing, product innovation, assembly, and supply management. The supply management function was revamped and a chief supply officer (CSO) position created. The CPO was made part of the executive committee thus allowing for a tight alignment of supply strategies with the firm’s corporate strategy. Over the next year, the CFO was able to reduce the worldwide supply base from 1000 suppliers to 50 suppliers, build relationships with them through long-term contracts, training, certification, and involving them from the design stage. The results of this drive was apparent as the cost of goods sold reduced by forty percent, there were virtually no quality problems with materials coming in from suppliers, production lead times came down by fifty percent, and the cycle time reduced by thirty percent.
What is the net impact of the firm’s implementation of its value analysis and business process reengineering programs?
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