How Can OEMs Cut Costs and Optimize Their Supply Chain?

For original equipment manufacturers (OEMs), the stress of product design and manufacturing often overshadows the maintenance of a lean supply chain.

oem-ebook-quoteSupply chain optimization is an initiative that always seems attractive, but it can be difficult to pinpoint just where to start.

According to a recent TMG-IMG study, OEM supply chain management and optimization can deliver enormous benefits to cutting costs associated with sales, administration, and products. Delaying a supply chain overhaul could lead to years of needless spending that could have easily be spent slashing costs.

Luckily, there are several simple steps you can take one at a time to achieve a lean supply chain, each of which carry a significant impact.

Step 1: Inventory Management

A well-maintained inventory can improve your business in a number of ways, some of which include:

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Vendor-Managed Inventory (VMI) is a software-automated process offered by manufacturers like CGR Products to streamline the supply chain. In a VMI system, customers send automatically generated product reports directly to the manufacturer via customized software.

The advanced software eliminates the time-consuming rounds employees make as they walk around a warehouse counting products, as well as the possibility of human error or miscounting that result in delays and rush orders. Your entire ordering process is streamlined so only a minimum number of people have to touch each order.

Step 2: Production & Assembly Optimization

20150831_160143Design automation strategies, facility layouts, and production areas can all be re-organized and optimized to maximize workflow and efficiency.

One commercial small engine builder, for example, received die-cut rubber gasket parts in bulk delivery boxes, which called for a time-consuming assembly line process that involved stacking piles of parts, assembling them with additional gaskets, and finally installing them.

By changing to a rubber-coated, metal-clad material and packaging the parts in pre-counted and banded stacks, the OEM drastically reduced these assembly line times and achieved a direct costs savings of $400,000. Opportunities for small changes and efficiencies like these can be found everywhere, as long as teams are committed to looking for them.

Next Steps…

For more tips on cutting costs throughout the supply chain, we invite you to download our latest whitepaper, How OEMs Can Optimize Their Supply Chain.

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Chuck Keeley

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Chuck Keeley was appointed the President of CGR Products in 1995. He has also served on the Gasket Fabricator Association board since 2011, of which CGR has been a member for over 20 years. Chuck graduated from North Carolina State University and resides in Greensboro, North Carolina.


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