4. Unitec Supply Chain Approach

The industrial world's necessities observation was not restricted to the pure growing demand trend existence, but comprised a fast-scientific processes' and pertinent expenses' study.

The price management sphere was actually one of the matters in which Unitec has been a trail blazer: the company was one of the first in thinking and creating ABC (Activity Based Costing) process analysis, which distinguishes itself through cost drivers from traditional accountancy, that allocates expenses using cost areas based on structures (example: marketing).
The ABC is a system which supply real costs' incidence on each product or service sold by the company, leaving his structure out of consideration.

Traditionally cost accountants are right if only one product is manufactured, as they will be sure of the correct costs allocation.
It is not more so with several different products, because, for example, a certain product might take more time in one expensive machine than another one, and a simple proportional mean is not correct in this case, but an accurate analysis is needed.

ABC's use enable a correct market-price setting for all articles, as the realization cost is correctly calculated.
This concept was applied to supply chain management, which in greater companies can reach 144 operational steps, from the customer's inquiry to the accounting record.
Every stage has its cost and by summing them results the entire process charge.

A supply's cost, considering the process only, may vary from 300 to 2,000 euro in a big industry: Unitec has seen in the processes' rationalization possibility an opportunity for offering large savings to customers.

The firm has developed and implemented an internal procedures set, which are informatically supported, in order to achieve the paperless objective: as direct result Unitec obtained a supply management cost lower than its customers' (nearly 50%).
That has driven to the furnishing activities outsourcing proposal, which is a BPO (Business Process Outsourcing) specific area.
The major consequence for customers is the immediate provisions expenses reduction and that they become variable instead fix, so directly connected to company's trend.
As secondary effect there is the enormous supplier number reduction, but safeguarding close relationships: when suppliers are transferred for managing, they keep their status for the customer, avoiding to lose all the good business' relationships which have been set up in the past.

The picture on the left represents the suppliers relationships situation in a company which manages them itself: the connections' dispersion is considerable.

Here is shown the change after assigning furnishers to Unitec.
This spare purchaser's irregular contacts, more expensive and difficult to manage.
However, strategic and core relationships are preserved.


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