Executive Briefings

'De-costing' Programs May Save Manufacturers Huge Sums

U.S. manufacturing executives have an opportunity to make their factories even more competitive through parts and components de-costing programs. De-costing is simply a term that refers to removing cost from operations period-over-period. Parts and components usage is a great place to focus because improvements can provide such clear returns.

On paper, de-costing savings show in reduced spending on parts and components. These typically stem from a strategic choice to invest in high-quality parts and world-class maintenance practices. For example, a manufacturing company might purchase a premium bearing that costs 30 percent more than a bargain-priced bearing. But if the premium bearing lasts twice as long, the plant saves 50 percent of its bearing procurement cost alone. When the use of superior parts is combined with implementation of trial-tested maintenance standards, results expand to include reduced machinery downtime, improved productivity and stronger output.

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On paper, de-costing savings show in reduced spending on parts and components. These typically stem from a strategic choice to invest in high-quality parts and world-class maintenance practices. For example, a manufacturing company might purchase a premium bearing that costs 30 percent more than a bargain-priced bearing. But if the premium bearing lasts twice as long, the plant saves 50 percent of its bearing procurement cost alone. When the use of superior parts is combined with implementation of trial-tested maintenance standards, results expand to include reduced machinery downtime, improved productivity and stronger output.

Read Full Article