COP - Cost Optimization Program

COPCOST OPTIMIZATION

PROGRAM

Alexandre Kalup Vasconcelos

MBA Exe FIA T39

AGENDA

1. Introduction

2. Process

3. Behavior

4. System

5. Case study – Behr Brasil

COP

1. I

NT

RO

DU

CT

ION

1.1 Crises history

1.2 Definition

1.3 ConceptCOP

1. INTRODUCTION1.1 CRISES HISTORY

COP

COP


COP


COP


COP



COP


COP


COP

COP


2011

CRISE EUROPEIA

O Velho Mundo , berço do Iluminismo,

Renascimento, Ideologias, filosofias e a

transformadora Revolução Industrial , diante do

mundo garantiu o status de uma região de alto

desenvolvimento econômico e bem-estar social .

Mas a imagem construída ao longo dos séculos

agora está associada a turbulências de mercado,

ao descontrole das contas públicas e políticas

assumidas que conduziram a zona do euro para

uma crise financeira que é muito mais grave do

que imaginaram e de difícil superação a curto e

médio prazo. Desemprego, altos impostos, preços

elevados e medidas de austeridade mexem com

a vida dos europeus.

COP


COPDécadas 50 70 9060 80 00Dutra Vargas Jucelino Janio Ditadura Sarney Collor FHC Lula


“Isto não é o fim. Nem mesmo

é o começo do fim. Talvez seja

o fim do começo” - Winston

Churchill.

COP

1. INTRODUCTION1.2 DEFINITION

COP

1. Operation: Increase company productivity

2. Market: Improve company competiveness

3. Customer: Achieve customer satisfaction

4. Sales: Increase company business

5. Financial: Increase company profitability

Cost Optimization Program

FIT TO COMPETE

COP

1. INTRODUCTION1.3 CONCEPT

PROCESSDevelopment steps

Initiatives

Target Setting

BEHAVIOROrganization

Mindset Change

Communication

SYSTEMData base

Progress Reports

Continuous system management

2. P

RO

CE

SS

2.1 Process Flow

2.2 Idea Generation

2.3 Idea Data Sheet (IDS)

2.4 Development Steps (DS)

2.5 Initiatives

2.6 Target Setting

"Nós sempre podemos fazer

melhor: nós sempre podemos ir

mais longe; nós sempre

podemos encontrar novas

possibilidades. É preciso estar

sempre fazendo e progredindo"

Henry Ford.

COP

2. PROCESS2.1 PROCESS FLOW

Idea

Generation

Several sources

and activities

generate new

ideas.

Idea

Description

The idea author

fulfill the idea

data sheet (IDS)

and input in the

system.

The idea owner drive

the idea

implementation

across the

development steps

(DS)

Idea

Development

DS1

DS2

DS3

DS4

DS5

DS6

BEST

PRACTICES

2. PROCESS2.2 GENERATING IDEAS

Resources - materials, people and

information available to perform the

work - after all are the people who

innovate, not companies.

Techniques - skills in managing

innovation in the different levels of the

organization and focused on the design,

development and implementation of

creative ideas.

Motivation - the most important

component of the catalyst actions for

innovation.

Support Organization - recognition

of creative work, mechanisms for

developing new ideas, limited number of

hierarchies, flexible rules and less

bureaucracy, Management flexibility,

acceptance and encouragement of new

ideas, favorable relationships, dialogue,

trust and exchange of experiences

between members and staff.

I N

N O

V A

T I

O N

2. PROCESS2.3 IDEA DATA SHEET

DS1

Registered idea

DS2

Investigated idea

DS3

Validated idea

DS4 - Prepared idea

DS5 - Idea Implemented

DS6 Saving

Idea validated!

Idea not double counted!

Idea Owner defined!

Technically feasible!

Analysis of profitability!

Approval of the customer!

Implementation decision!

Using the Budget set!

Approval of the client to invest!

Design / Work Plan / List organized!

Revised calculation of production costs!

Change of production / vendor made!

Change Design / Work Plan revised!

Parts List active!

Stock reset!

Saving confirmed!

2. PROCESS2.4 DEVELOPMENT STEPS

Initiatives Responsible Description

COM Purchasing

Material cost reductions due to supplier

commercial negotiations, resourcing

activities and technical modifications

PRO-1 Product Engineering

Material cost reduction due to techncial

modifications, changes of specification,

development hours optimization

PRO-2 Process Engineering

Process cost reductions due to men

power (blue collar) and machine cost

optimization

PLA Plant Production

Production cost reductions due to

maintenance, quality and losgistics

optimization

ADM Administrative

Administrative cost reductions due to

men power (white collar), material office

and service expenses

SAL Sales

Sales cost recovery with the customers

due to material cost, labor and

overheads increase

TOTAL

COP

2. PROCESS2.5 INITIATIVES

DS1

DS2

DS3

DS4

DS5

DS6

2. PROCESS2.5 INITIATIVES

Initiative Guideline

To clarify all initiatives, the program has a guideline

The initiative guideline explain the main rules of

COP

The guideline contain the cost calculation scheme for

each kind idea

The guideline is built by COP Head and Controlling

area

The guideline is signed by the CEO and all Manager

staff

The COP team is trained to apply the initiative

guideline

The guideline is a key document to avoid

misunderstanding and conflicts

Split in functional Initiatives LONG TERM goal 2013-2015

Initiative Managers 2013 2014 2015 Total

COM Purchasing 2,1 2,5 2,7 7,3

PRO-1 Engineering1 0,5 0,6 0,6 1,7

PRO-2 Engineering2 0,7 0,8 0,9 2,4

PLA Plant 0,7 1,0 1,1 2,8

ADM Administrative 0,0 0,0 0,4 0,4

SAL Sales 0,6 0,8 0,6 2,0

Σ CEO 5,0 6,0 6,8 17,7

2. PROCESS2.6 TARGET SETTING

SMARTSpecific

Measurable

Attainable

Realistc

Timely

COP Head is the main responsible to assure the target setting

process while the CEO is the major responsible for the company

target achievement supported by his\her Managers.

BEST CASE

DS2 – DS6

FORECAST

DS4 – DS6


DS1

DS2

DS3

DS4

DS5

DS6

January current year

100% in BC situation and

30% in FC

April current year

140% in BC condition and

50% in FC

July current year

90% in FC situation

December current year

100% in FC condition

September previews

year

Starts to fill up ideas

YEARLY

MILESTONES

Workshops brainstorming

starts take place

Year end rally

Speed up investigation and

validation process

Speed up implementation

process


3. B

EH

AV

IOR

3.1 Organization

3.2 Mindset Change

3.3 Communication

A clareza sobre os valores e

comportamentos não adianta

muito sem estímulos. Para que os

valores realmente signifiquem

alguma coisa, as empresas devem

recompensar as pessoas que os

demonstram e punir as que não

os demonstram. Acredite-me, isso

é muito importante para a

vitória” Jack Welch (2005). COP

Line

Managers

Manager

CEO COP Main Sponsor

COP Head

COP Initiative Responsible

3. BEHAVIOR3.1 ORGANIZATION

Full time

Part time

HEAD

COP

PU

Manager

Engineering

Manager

Plant

Manager

ADM \HR

Manager

Sales

Manager

COM PRO PLA ADM VEN

Coordinator Coordinator Coordinator Coordinator Coordinator

COM PRO PLA ADM VEN

Controlling

COP


33

Responsible to drive the process in his initiative in order to achieve the company

goal supported directly by the Initiate coordinator

Answering directly to COP Head, is responsible to assure the COP controlling

guideline application and resp. for the system administration. Special reports

construction and new users COP training are also tasks below this function.

The idea owner is in charge of idea development from step 2 till step6. The timing

plan and saving calculation fields are under his responsibility.

Responsible for the initiative tracking in the idea level, system monitoring

assuring all data entering, up-to-dateness, data quality, tracking of timelines and

support the project teams. Define the idea owner, promote workshops and use of

the best practices are tasks of this function.

Responsible to participate of COP forums supporting the Initiative responsible to

take decisions and achieve the company goal

Main responsible for the program management, driving the process, monitoring

the progress, preparing Board reports, inform and motivate the organization

The idea author is responsible to fill out the idea registering as much as possible

details in the data base available

COP Steering

Committee

COP Head

Initiative Coordinator

Initiative Responsible

Idea Owner

COP Controlling

Idea Author

COP


The Six Stages of COP Implementation

TO BE DESIGNED

DESIGNED INSTALLEDMECHANICAL COMPLIANCE

UNDER-STANDING

OWNERSHIP / USAGE

0 1 2 3 4 5

Perf

orm

ance /

Susta

inable

•Accurate and relevant information is displayed to a level of at least 90% compliance

•The system element is monitored

•Action are being taken

•Information / data from the system element is used to raise awareness of problems / opportunities

•Action are being taken to address variations from plan

•Individuals involved in its use can train others

•Examples of improvement are communicated and learning are shared

•Individuals demonstrate continuous improvement

•Actions being used to drive the business forward

•Area manager understands and accepts the need for the system element

•Design and format of system elements have been agreed

•The element has been introduced and is in operation

•Individuals involved with the element have had training in it’s use and purpose

•The element is easily available for all

3. BEHAVIOR3.2 MINDSET CHANGE

Information

Change

of mindsetMotivation

Inform about objectives,

organization, structure &

progress and results of

COP

Motivate to identify with the

objectives of COP and

contribute to the success of

the program

Enhance cost optimization

oriented thinking and

behaviour throughout the

organization

3. BEHAVIOR3.3 COMMUNICATION

Information

Change

of mindsetMotivation

COP Target

Monthly results

Who is involved

Best practices

Milestone progress f-up

Award program for best ideas

Sucess case studies publication

Target achieved celebration

Service Promises

Why COP?

Campaign avoiding waste

Awareness!!!

3. BEHAVIOR3.4 COMMUNICATION

4. S

YS

TE

M

4.1 Data base

4.2 Progress Reports

4.3 Continuous Management

“O que separa os inventores dos

inovadores é a capacidade de

pensar em todas as condições e

conexões necessárias para

permitir que uma solução se

encaixe perfeitamente no

compasso diário de quem a

utilizará. Isto é pensamento

sistêmico.” Mattew E. May

(2007) COP

4. SYSTEM4.1 DATABASE

How to track hundred ideas with more than 20 edit fields

at the same time, across 6 development steps for 6

initiatives in 2 economical scenarios *best case &

forecast, taking in account at least 2 years of life time

and generating 10 different reports during 52 weeks

per year with the minimum resources?

4. SYSTEM4.1 DATABASE

1. The system is the third key success factor for COP

2. Just with the tool system, we are able to manage the COP

process and drive *not just control, the company behavior

3. The system is responsible for the whole data bank management

4. All reports are generated automatic with option, manual by

demand

5. Just with a good system installed, the COP dedicated team can

be reduced

6. Working with a system, you can manage different plants locally

and worldwide

7. Software recommendation: use WEB environment able to

communicate and set on alarms for DS approvers by email as

well as extract reports

8. Alternative: EXCEL *not recommended

4. SYSTEM4.2 PROGRESS REPORT

The progress report is the main tool for the program tracking

and controlling

Main reports:

COP Total

Initiative level

Idea level

Pocket card

TOP10 Potential BC (DS2-6)

TOP10 Potential FC (DS4-6)

TOP10 Overdue Milestone FC

TOP10 Overdue Milestone BC

TOP10 Potential DS6

TOP10 Potential DS1

TOP10 Audit checked red

COP- Manager F-up(area related)

LE

VE

L 2

MANAGER

Coordinator

Idea Owner

* Agenda: F-up cockpit, action plan, bridge of the last two weeks and preview next

COP- Team F-up (ratio project related)

LE

VE

L 3

COORDINATOR

Idea Owners

Team members

* Agenda: Track ratio ideas, f-up action plan, bridge of the last week and preview next weeks

LE

VE

L 1

COP- Board F-up (initiative related)

President\CEO

Managers

* Agenda: F-up cockpit, bridge of the last month and preview next month

Once a month

Each two

weeks

Weekly

4. SYSTEM4.3 CONTINUOUS MANAGEMENT

6. C

AS

ES

TU

DY

BE

HR

BR

AS

IL

6.1 BEHR Group

6.2 Project P2010

6.3 Main Challengers

6.4 Actions & Results

Welcome at

Behr Brasil

Updated

29/11/11

Behr GmbH & Co. KG, Stuttgart, is a systems partner

of the international automotive industry. A specialist

for automotive air conditioning and engine

cooling systems, the Behr Group is one of the world’s

leading manufacturers and suppliers of original

equipment for light vehicles and trucks. Group sales

in the 2010 business year came to around 3.3 billion

EUR. Currently, Behr employs some 16,500 staff at 9

development locations, 22 production sites and 10 joint

ventures worldwide.

6. CASE STUDY6.1 BEHR GROUP

45


46

BEHR’S MARKET STRATEGY

Fully competitive

Cost

Quality/Reliability

Global presence

No. 1 worldwideTechnology

Customer support

Performance

Leadership


47


48


http://www.mazda.de/home.asp

http://saturn.gmcanada.com/ss/english/vehicles/saturn/saturn.html

http://www.carletti.com.ar/images/nissan/logo.jpg

http://www.dfmc.com.cn/main.aspx

49


http://www.cummins.com/cmi/index.jsp?siteId=1&langId=1033&newsInfo=true

http://www.deutz-fahr.de/

http://www.dfmc.com.cn/main.aspx

http://www.carletti.com.ar/images/nissan/logo.jpg

COP

6. CASE STUDY6.2 PROJECT P2010

COP

6. CASE STUDY6.2 MAIN CHALLENGERS

Process not defined (no step development implemented);

Lack of understanding of program objectives and responsibilities of the team;

Meeting with many conflicts and poor performance;

Assertiveness of implementation dates low;

Forecast equivocal results (lack of Best Case Scenarios and Forecast);

Lack of monitoring and control of the program as a whole;

Lack of alignment between major areas: Eng, Comp, Log, Wed, Prod, Control, Sales;

Problems of logistics management during the implementation of new ideas (old stock);

Lack of rules for saving calculation - no "guideline" defined;

Lack of transparency in the disclosure of the results;

Lack of a common goal, involving the entire management and board;

Lack of a budget (budget) to specific activities of optimizing series of projects;

Lack of clear knowledge about the rules and stages of approval and modification of customers;

Several ideas implemented without the approval of the Quality;

Lack of alignment with the internal program "Suggestions for Improvement";

Lack of motivation of the supplier to suggest technical improvements;

None identified motivation program for employees and suppliers;

Lack of dedicated staff;

Lack of priority in the daily agenda of Managers and Directors;

Process setting goals not aligned with the mission, vision, values the company;

Establishing and division goals inappropriate;

Lack of a communication plan to inform, motivate and emphasize organizational culture

The lack of a prize for the best suppliers;

PR

OC

ES

S

Recovered the suggestion program

credibility

Suppliers deep involved in the process

Process well defined and trained

Initiatives covering all cost center areas of

the company – value chain

Best case and Forecast scenarios well

clarified

Target aligned with Mission, Vision and

Values

Define long term target at least 3 years

ahead

Splited the target between the initiatives

and the responsible areas

Kept the target year milestones on track

6. CASE STUDY6.3 ACTIONS & RESULTS

BE

HA

VIO

R

Structure well defined

COP Team function roles known by all

organization

Management level deep involved and

committed

President speech emphasizing the COP

importance for the whole company,

FREQUENTELY

Developed a communication plan

approaching the 3 main communication

clusters

COP Target milestones dates and results

frequently informed

Built a good award program to compensate

the best ideas and higher savings


SY

ST

EM

It was a key factor to connect Process

and Behavior

Software developed in WEB

environment, with direct link to the

email application

The administration under COP

Controlling responsibility

Continuous management system

implemented (high dicipline)

The idea data sheet converted in

electronic data

Suggestion Program changed working

electronic in the same base of P2010

Standard reports created - Not accepted

parallel reports out of the system (use

just one source)


More than 600 ideas implemented per year (just Behr Brasil), 3.000

worldwide;

5% of cots reduction achieved over net sales per year, 450 MEUR

worldwide;

Competitive capacity improved with margin increase;

Customer satisfaction improved;

3 Awards of cost reduction won from three different customers;

Mindset changed “each cent counts!” cost reduction culture;

In 3 years, 3 cars given by Behr Brasil Award Program;

End 2010, the program was extended for more 3 years.


COP

CONTATO

Alexandre Kalup Vasconcelos

Phone: (11) 99 629 5086

[email protected]

Skype:ale30071974

OBRIGADO

Economy & Finance

COP - Cost Optimization Program