Download: Supplier Cost Reduction Form (pdf)
In an effort to remain competitive, the Hines corporation has implemented an aggressive Cost Reduction Program with members of the supply base. The objective of the program is to maintain a database of supplier-related cost reduction proposals equal to 5% of annual material purchases. Savings from the suggestions that are implemented are shared, thereby benefiting both the Hines Corporation and the supplier. Other tactics used to attack cost at the Hines Corporation include increasing global purchases and the consolidation of purchases across multiple Hines Corporation subsidiaries.
Suggestions
The Hines Corporation believes that it is prudent to utilize the expertise of the members of the supply base when generating cost reduction ideas. Therefore, the Hines Corporation requests that suppliers complete and return the Supplier Cost Improvement Idea Form. Multiple forms may be required to reach the 5% goal. Once received, the cost reduction suggestion will be reviewed by the appropriate Hines Corporation representatives. If implemented, savings will be shared between Hines Corporation and the supplier with Hines Corporation receiving the first 2.5% savings. The supplier will receive the second 2.5% savings and any additional savings will be divided equally between Hines Corporation and the supplier. Consider the following elements when generating cost reduction ideas: specifications, volume / mix, transaction efficiency / Electronic Data Interchange, packaging , transportation, warrant, lead-time, warehousing, obsolescence, scrap and rework.