Author: Robin Cooper and Regine Slagmulde
Co-published with the Institute for Management Accountants. THE BOTTOM LINE: IT IS NOT ENOUGH FOR A LEAN ENTERPRISE TO BE HIGHLY EFFECTIVE. IT MUST BE PART OF A HIGHLY EFFECTIVE SUPPLIER NETWORK. Four questions determine whether a company is using interorganizational cost management. * Does your firm set specific cost-reduction objectives for its suppliers? * Does your firm help its customers and/or suppliers find ways to achieve their cost-education objectives? * Does your firm take into account the profitability of its suppliers when negotiating component pricing with them? * Is your firm continuously making its buyer-supplier interfaces more efficient? If the answer is no to any of these questions, your firm risks introducing products that cost too much or are not competitive. Competitive pressure has led many firms to try to increase the efficiency of supplier firms through interorganizational cost management systems, a structured approach to coordinating the activities of firms in a supplier network to reduce the total costs in the network. It is particularly important to lean enterprises for two reasons: * Lean enterprises typically outsource more of the added value of their products than their mass producer counterparts. * Lean enterprises usually compete more aggressively and must manage costs more effectively. However, more than just cost management must cross interorganizational boundaries. Suppliers are also a major source of innovation for lean enterprises. Successful supplier networks encourage every firm in the network to innovate and compete more aggressively. In this book, the authors use nine case studies to document the way successful companies transfer cost management pressures across organizational boundaries. Read this book to learn to manage the supply chain to forge competitive advantage while reducing costs. "Cooper and Slagmulder's important new book shows how companies are using interorganizational cost management in an interesting variety of value-adding relationships. The relationships range from the relatively simple, aimed at lowering materials and coordination costs, through long-term complex partnerships where suppliers become a critical source for creativity and innovation. A major advance for the cost management and logistics fields." - Robert S. Kaplan, Marvin Bower Professor of Leadership Development, Harvard Business School "Supply Chain Development for the Lean Enterprise provides an eye-opening look at how strategic cost management can drive profits, motivate behavior and keep an organization on target. A great mixture of theory and actual case studies. A must read for organizations that want to optimize profits and lead in their industry." - Ralph W. Canter, Partner, KPMG Consulting.
