In this article, NPI’s Paul Steiner discusses the political fallout that threatens economic improvements. To fund the healthcare reforms set forth by Congress, medical device manufacturers will soon be charged a 2.3 percent excise tax on the sale of most medical devices.

The threats to and opportunities for the medical device industry over the next several years will be equally substantial. Reducing rampant vendor overspending is one way to tip the scales in favor of manufacturers. By offsetting the recent tax increase, medical device companies can commit more spend to R&D, protect jobs and innovate. And it’s faster than waiting for a political solution.

With the recent volcano eruption in Iceland, major manufacturers with global suppliers have had to halt operations as flights were grounded throughout Europe. Earlier this year, an earthquake in Chile ground supply chains in the area, halting major food source supplies.

Can disaster planning really help prevent these supply chain disruptions? Are the risks associated with lean inventories worth the cost when operations are halted until supplies are re-stocked? Natural disasters like this, and even the current BP oil leak, can prompt manufacturers to look more closely at their master operating plans.

Read More: http://www.manufacturing.net/Article-Handling-Supply-Chain-Disruptions-052110.aspx?menuid=242

Making smart decisions about supply chain cost reductions can mean the difference between an effective strategy that garners results over the long term, and one where short term gains are outweighed by long term problems.  How will your organization know if it’s making the right decisions and implementing the best strategies for long term success? 

Organizations striving to achieve cost reductions can realize positive results by thoroughly and continuously analyzing the strengths and weaknesses of their supplier mix, identifying areas of consolidation, and determining its impact on capital and operating costs.  Organizational focus on supply chain cost reduction needs to be a series of ongoing initiatives, as opposed to one time ventures.   A regular review of vendor relationships and contracts will help to ensure rates and terms remain favorable over the long term.

At a tactical level, these cost reduction initiatives should include a monthly review of invoices.  The monetary gains associated with monitoring invoices for billing errors are approximately 3-5% of gross spend.  Over the course of a year, catching errors of this nature can lead to thousands, sometimes millions of dollars in savings.  This is an area of cost savings often overlooked, as businesses assume that once their contracts show favorable rates and terms, the work is done. 

Some companies seek to reduce employee numbers as part of their supply chain cost reduction strategy.  While job reductions can play a role in cost savings, it is important to recognize that cutting too deeply can lead to new problems.  When employee counts fall too low, it can become increasingly difficult to implement needed supply chain cost reduction strategies.  History shows that the short term gains associated with job cuts can lead to long term efficiency problems.

Establishing an effective supply chain cost reduction strategy can mean the difference between long term success or failure.  Companies around the world rely on NPI to help them achieve successful supply chain cost reductions that balance efficiency with savings.  Our expertise with implementing these supply chain cost reductions will ensure your business is poised for growth, while still enjoying the benefits of reduced expenses.

Contact us today to learn how NPI can help your business with supply chain cost reduction strategies.