Indirect Materials

 09/01/2020
By Dr. Alin Posteucă

Indirect materials have amazing costs in most companies. However, often their standardization and improvement is not a continuous focus for companies (with visible results).

Large variations between system and factual data are often encountered, increasing and generating large and continuous discussions.

Often those involved in operations determine the appearance of special orders with high costs for all kinds of indirect materials (offices are similar), such as:

    • for maintenance (emulsions, cleaning materials, protective materials, etc.);
    • for production (knives, drills, protective materials, cleaning materials, etc);
    • for warehouses (internal packaging, protective materials, cleaning materials, etc.), etc.

Recently, in a prestigious multinational company I did not find any maintenance concern for standardizing the emulsion consumption of the equipment: area name; emulsion type (standardized at the factory level); quantity; duration (stopping equipment – yes or no; if yes then no production is planned for this time); frequency (weekly, monthly).

So is the standardization of indirect materials a challenge and a concern at the operational level (avoiding stops/ slowdowns or non-quality) and an opportunity for cost improvement in your company?

Source: Alin Posteucă on LinkedIn

Dr. Alin Posteucă is the founder and CEO of Exegens®, a global consulting firm specialized in cost competitiveness improvement and operational excellence. It helps customers create and implement profitable strategies and cost improvement programs that ensure a unit cost improvement of at least 6% per year for each of the next 5 years by maximizing the efficiency and effectiveness of operations.

He is the author of Manufacturing Cost Policy Deployment (MCPD) concept, published in three books at Productivity Press – Routledge/ CRC, New York (USA). The latest, ”Manufacturing Cost Policy Deployment (MCPD) Profitability Scenarios: Systematic and Systemic Improvement of Manufacturing Costs” (October 2018) is based on its main belief that the annual and multiannual target profit can be achieved irrespective of the sales volumes, increasing or decreasing. He is also the co-author of the book ”Manufacturing Cost Policy Deployment (MCPD) and Methods Design Concept (MDC): The Path to Competitiveness”, published at Productivity Press New York (USA), 2017, as well as the author of the book ”Manufacturing Cost Policy Deployment (MCPD) Transformation: Uncovering Hidden Reserves of Profitability”, published at Productivity Press din New York (USA), February 2018.

Alin Posteucă has more than 20 years of experience in Cost Improvement consulting and training. He has a PhD degree in Industrial Engineering and a PhD degree in Economics.