For most companies, the largest cost category overall costs with suppliers. However, figuring out how to determine the best areas to conserve power, and then, how to measure and report on them, raises serious problems. Both under-and over-supply savings gaps signal incorrect reality, which leads to an excessive emphasis on low income to reduce costs, false corporate resources and staff were rewarded for misconduct. In addition, supply savings gaps hide contribution strategic suppliers can provide. In the study of supply management practices in 30 major North American and European companies, the authors identified a variety of measurement and reporting practices in the supply of savings. They concluded that the correct measurement of the power saving is almost impossible, and that often the gap between savings and told reality. They explore why there are gaps, what actions lead to the conditions and drive savings, the effects of poor nutrition and measurement of savings that can be done to recognize the power saving spaces. To overcome the measurement and reporting issues, the authors recommend that managers do three things. Focus on total cost of ownership, to classify different types of savings and wired budget saving "Hide
by P. Fraser Johnson, Michelle R. Leenders Source: MIT Sloan Management Review 9 pages. Publication Date: January 1, 2010. Prod. #: SMR336-PDF-ENG
Related Case Solutions & Analyses:
Leadership for Change
Unprofitable Customers and their Management
Non-Territorial Offices at Semco
Barry Riceman at NetD (A)
Meeting the Diversity Challenge at PepsiCo: The Steve Reinemund Era
Singapore TradeNet: Beyond TradeNet to the Intelligent Island
Texas Eastman Co.
Grosvenor Park
ACC Reading No.5: The Statement of Cash Flows
Cooley Distillery: The Independent Spirit of Ireland
