The Enduring Value of Hard Cost Savings
posted by TURTLE & HUGHES in THIS
Today's integrated supply customers are changing the way they record the value we provide, as well as how they book true cost savings in a meaningful way. Many take a holistic approach through TCO (Total Cost of Ownership) – a model highlighting (among other things) the impact of automation, master data management, freight expense, predictive tools, inventory optimization, reliability, consumption reduction, and waste reduction.
These are dynamic measures that each Turtle & Hughes Integrated Supply (THIS) client can tweak to fit their needs, and store and visualize using our cloud platform "THISone." Even with all of these new tools at our fingertips, THIS still sees the documentation of clear and measurable hard material savings as the core element when looking at the savings within a manufacturing plant’s cost of operations.
$23 Million Saved Over Two Years
In just the past two years, THIS has reduced our total clients' MRO material costs by a documented $23 million – a hard cost/year-over-year reduction in the purchase price of the materials they use every day. This is a number that goes straight to the client’s bottom line as a simple comparison of what the plant paid before THIS versus their current MRO material costs.
We do this through redesigning our client's supply chain for MRO supplies, going direct to manufacturers and Tier 1 suppliers, and leveraging our purchasing power to achieve advantage pricing and broad access to products in over 34 major MRO commodities that benefit from even our smallest of clients.
Industry best practices suggest that material price savings are only a part of the savings opportunities which present themselves at most manufacturing plants. Consumption reduction tools such as deploying vending machines and controlled storerooms; Inventory optimization tools that ensure inventory is on-hand by forecasting demand, and Reliability tools that assist in analyzing and predicting failures, can provide further savings opportunities.
If your integrated supplier is not measuring hard costs savings, you may be missing out on some valuable insight into your facility's cost of operations.