The profit formula contains two main parameters – revenue and cost. There are a few industries where the cost side can be neglected as the market can be seen as secured and there are a few companies who live only by brand power. Thus speaking, taking the majority as the normal case, we can conclude that companies are targeting the reduction of expenses. Manufacturing companies in particular have a close eye on material expenses as those can add up to 70% of the company’s total expenses. However procurement is not only about competitive prices but also about stable quality, punctual delivery, optimized processes and partnerships. Pre-mature supplier bases and the shortages of professional in-house resources are additional limiting factors which are typical for emerging markets.
Together with our clients we are working on the following tasks:
| • | How to close the price gap towards the local competition. |
| • | How to understand the advantages of local competitors. |
| • | How to balance best pricing with stable quality. |
| • | How to build-up a second source without making too much noise in the market. |
| • | How to define articles, volumes and complexity levels which make sense for Asia sourcing. |
| • | How to control the localization process and how to establish secure and effective new supplier approval processes. |
| • | How to achieve best pricing when dealing with high mix and low volume articles. |
| • | How to optimize raw material purchases. |
| • | How to decide whether to produce in-house or to outsource. |
| • | How to evaluate pros and cons of supplier management vs. supplier development. |
| • | How to integrate procurement KPIs with quality KPIs. |
| • | How to optimize lead time, stock rate and payment terms. |
| • | How to create effective controlling tools to better monitor procurement activities. |
| • | How to upgrade the sourcing staff. |
| • | How to do the next step after component localization (e.g. product re-engineering, market adaptation etc.). |
| • | Etc. |
The topic, procurement, combines short- and long term targets, connects several departments and balances the strategic view with monetary savings aspects. NxtAsia utilizes all levers to optimize the procurement situation of our clients.
We have the following main services in our portfolio:
| • | Procurement Audit – The procurement audit is a systematic and independent analysis to determine whether the procurement activities are effective and compliant to achieve the company objectives. An external audit conducted by professionals will help decision makers to get a clear picture of the performance status of its procurement department. Completing the Procurement Audit will give your organization the opportunity to identify risks and weaknesses related to current procurement processes and purchasing prices. Within a time frame of 2-4 weeks our professionals carry out a thorough analysis of your procurement organization & processes and provide a fact-based status report, which includes the calculation of savings potential in monetary terms. |
| • | Cost Optimization Program (C-O-P) – NxtAsia optimizes the profits of our clients by reducing the material costs in the production process. In order to do so we run “C-O-Ps”. Our projects include analyzing, identifying, targeting, implementing and securing of the steps. Simply put, C-O-Ps primarily focus on reducing procurement costs, preferable for manufacturing or trading companies with high COGS, but are also suitable for service companies where we target price savings in non-production materials like marketing expenses. |
| • | Localization – NxtAsia Consulting is carrying out localization projects in close collaboration with the procurement, technical, and quality departments of our clients. Generally, the local plant is fully involved in the process and supported by the headquarters. Each step will be documented and reported and NxtAsia contributes with effective interface and efficient project management skills. For manufacturers NxtAsia is one of the leading localization experts in the Asian market. |
| • | Sourcing – Manufacturing costs increased significantly in Asia as well as the quality level. It is true that Asia does not necessarily grant cheap component sourcing. The market has to be assessed in more detail and the process to identify low-cost suppliers has gotten more complex. NxtAsia navigates the clients in the process of setting-up new sources in Asia, from supplier research, RFQ stage, auditing and sampling process. In addition we are able to secure the complete back-end of the business, from production supervision, quality check, pre-shipment inspection and logistics. We offer the one-stop solution for our clients. |
| • | Inspection (Supplier, Quality, Pre-shipment) - Low prices for poor quality is valueless. NxtAsia Consulting ensures the products manufactured in Asia meet the clients’ requirements. As a standard, a thorough examination and inspection on production processes, quality systems and final products is absolutely necessary. Next to a thorough and detailed supplier audit, our inspectors will examine basic criteria for the finished products such as dimension-, appearance-, material check, functionality, technical parameters and packaging before shipment. For more complex tests, we collaborate with well-known third party laboratories. NxtAsia will also carry-out periodic factory spot checks to guarantee a constant level of high quality standards. An important factor to keep delivery deadlines is well planned logistics. We map and analyze the inbound and outbound logistics streams, coordinate shipments and calculate best forwarding rates. The aim of our inspection service is to improve inventory levels, delivery schedules, data transparency and lower our clients overall risks and costs. |
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