How to achieve cost savings via Continuous Improvement
With rising commodity prices and increasing margin pressure, cost savings have never been more important than they are today. With the economy's recent lackluster performance and consumers' continued focus on "value," brand marketers are continuing to feel strong pressure to reduce costs to avoid having to increase prices.
Lisa Shambro, executive director of the Foundation for Strategic Sourcing, says in the upcoming issue of Contract Packaging magazine that there are tactics for achieving these desperately needed savings. She writes the following:
While the answer may differ by product, category, manufacturer, and marketer, one common solution remains: Continuous Improvement, also known as CI. What does CI mean? In a nutshell, it's finding ways to reduce product costs through any means possible—most notably process savings, though it can also be applied to materials in the production process. This is an approach that has been successfully demonstrated by other leading manufacturing industries, like automotive (e.g., Honda's Lean Network), and respected manufacturing companies (e.g., General Electric's Six Sigma).
For some suppliers of CPG companies, it's difficult to find resources to work on such initiatives. It's not hard to understand why, if you look at the evolution of our industry:
• Around 2000, strategic manufacturing outsourcing was "born" as branded marketing companies began to view outsourcing as an integral element of their sourcing strategy.
• From 2000 to 2005, contract manufacturing and packaging companies began to evolve and build strategic capabilities now required by customers, such as improved quality compliance, scorecarding, and systems integration.
• From 2005 to 2010, brand marketers continued to reduce costs by bidding out more business, sometimes between manufacturing and packaging suppliers.
In response, suppliers have made organizations even leaner. The leanest organizations are rewarded with more business.
Now we find ourselves in the position of needing to deliver additional cost savings when it appears there is nowhere else to go. How can we deliver on this need? The answer is through Continuous Improvement. The challenge is to identify internal resources within suppliers to lead the effort. Some suppliers don't see this as possible because all resources are fully committed (even overcommitted!).
Though this may be true, suppliers can't afford not to do this. Why? CI initiatives generally pay themselves out in the first year. If, as a supplier, you are hesitant, set aside funds to "test" the concept for a year and measure the results. If you don't see this resource more than paying out in the first year (even in the first six months), you need to further examine your execution (be it the resource, priorities, etc.).
Jacobson Companies moves into international markets
Jacobson Companies, Des Moines, IA, a third-party logistics and contract packaging services provider, said it has established Jacobson Global Logistics Ltd. (JGL), in Hong Kong. Jacobson will leverage JGL to expand its logistics services in Asia.
Separately, Jacobson's parent company, JHCI Holdings Inc., announced the acquisition of Chimerica Global Logistics Ltd., a logistics company headquartered in Hong Kong with subsidiary operations in China. And, Jacobson also announces a strategic partnership with Rhenus Logistics, one of Europe's leading logistics service providers.
The moves are significant steps in Jacobson's plan to expand its international 3PL offerings. JGL will provide international logistics services to and from the U.S., and within Asia. Services will include freight-forwarding (ocean and air), purchase order management, procurement and consolidation, origin value-added services, customs brokerage, bonded warehousing, and deconsolidation, among other services.
Chimerica Global Logistics will be fully integrated into Jacobson Global Logistics, offering logistics services in Hong Kong and China. Jacobson Global Logistics will provide a full range of international logistics services to and from the U.S. and within Asia.
The partnership with Rhenus Logistics allows Jacobson Companies access to an extensive logistics network into European countries with one partner. Jacobson's International Logistics division will provide regular air and ocean services to Central and Eastern Europe.