THE CATEGORY WRAP

Issue 7, March 2012

The need for speed

If you are one of those advanced Category Managers who has applied total cost management across your category, it may now be time to look at your suppliers’ costs, according to Jimmy Anklesaria.

The Category Wrap caught up with US based cost management expert Jimmy Anklesaria, during his recent trip to Melbourne, Sydney and Brisbane for The Faculty’s series of Strategic Cost Management workshops.

When we asked Jimmy about Category Management and what he felt was the critical area of focus, Jimmy proffered “the cost multiplier effect”.

The real question Jimmy believes should be asked now is; how good is my supplier’s cost management process? While you might have considered and implemented your own cost management process, unless you have driven this down through your suppliers, you will never achieve the levels of savings and benefit that you could through the multiplier effect.

Jimmy believes we should be approaching our key suppliers and conducting a supplier cost management assessment.

But cost management is not just about a set of rules; it’s about applying a process, capability and communication all the way through the supply chain, and driving out complexity. And it’s about speed. Speed is of the essence. There is no time to be reactive in driving cost out of the supply chain. Speed comes from process, standardisation and communication, hence the need for a robust and sustainable process that ensures breakthrough ideas are executed seamlessly and efficiently.

If the breakthrough idea at Company A is 10 months from conception to execution, and the competitor Company B can do this in two months, the $10 million savings which Company B can realise, is realised eight months earlier, so speed gives a significant cost and strategic benefit.

Jimmy says once you have applied best practice in your own business; don’t make the mistake of applying a different set of rules and standards to your suppliers. Not only should you be working with suppliers to ensure best product, service etc., but work with them on cost management to ensure total impact all the way through the supply chain.

If you would like more information regarding this article, please email The Faculty at info@thefaculty.com.au.