Enterprise vs Cost Center ThinkingNovember 11, 2019
Don’t fool yourself by only considering incremental cost.
World class organizations think enterprise wide when completing cost analysis.
Don’t get trapped into trying to optimize:
- Receiving Cost
- Ordering Cost
- The cost to borrow for capital investment.
- Machine efficiency
Consider the total cost saving to the enterprise. By cutting inventory 50%, will require more frequent receipts. However, the total enterprise cost reduce.
- We much lower capital requirements.
- Freed floor space that can be used for value added operations.
- Less excess and obsolete inventory.
Are you ready to reframe your focus?