Elimination of unnecessary stock and reduction of Work In Progress (WIP) improves cashflow. We all accept that ‘cash is king’ and by working with PP C&A, you could drastically improve your working capital and cash conversion cycles.
PP C&A will take ownership of the supply chain and ensure manufacturing is aligned to your precise needs, operating on both pull (Kanban), JIT and discrete purchase order methodologies with the clear aim to deliver to the exact date you need it. Transferring ownership of the supply chain to PP C&A will ensure true efficiency in resource allocation.
For outsourcing to deliver the maximum benefit, then the activities associated with purchasing and supply chain management should be included. The outsourcing partner should have the capabilities and skills to inherit, manage and develop the associated supply chain.
If you still have to manage parts of it and the associated costs of purchasing/logistics that go with it, then you are not going to see the true benefits.
An outsourced solution clearly creates a fixed cost of ownership for the customer, taking away the variability associated with overall volumes, batch sizes, fluctuations in material costs, internal direct costs (typically driven by variations in efficiency) and overhead cost amortisation.
Other (often) hidden costs of over-production, excess inventory, scrap and waste, over time costs etc. are all eliminated when an outsourcing solution has been designed and implemented successfully.