Small Improvements. Big Savings Potential.
A four-step approach to reducing material costs in Aerospace & Defense
While companies in other industries have adopted innovative approaches to cut material costs — with effective results — a variety of internal and external challenges have prevented Aerospace & Defense (A&D) companies from following suit. These types of challenges have forced many A&D companies to continue to make fragmented, ad hoc purchases that rob them of their buying power and undermine their efficiency.
When it comes to improving procurement practices, there is no silver bullet. An acceptable level of effectiveness can be achieved only through a series of small improvements. The good news is that we have seen these small improvements — when pursued as a coordinated efforts — reduce an A&D company's total procurement cost by as much as 15 percent. For a large company, this reduction can amount to hundreds of millions in annual savings. Written by Sanjay Agarwal, principal, Deloitte Consulting LLP, Scott Akman, principal, Deloitte Consulting LLP and Long Nguyen, manager, Deloitte Consulting LLP, "Small improvements. Big savings potential." provides a four-step approach to reducing material costs in the A&D industry.