The Cost Saving Potential of Standardization, -a study at a global packaging company
FöretagsledningManagementStandardizationTotal cost analysisCost savingsModel for cost saving potential
To introduce a standardized component assortment takes a lot of effort in order to make real cost savings. The rationalization effect itself is important, but perhaps even more important is to state the aim of the standardization efforts in a well-defined way. How can an organization assure that they are working in a proper way? How do they know that their efforts are being interpreted into the whole organization? And, how do they know that the standardization efforts actually save money? Different components differ heavily e.g. in technical complexity and quality issues.
The purpose of the master thesis is to identify the parameters affecting the potential of cost savings due to standardization of components.
To standardize a component assortment is difficult and requires involvement from different functions within the organization. It is essential to state a defined purpose of the standardization work and assure that the actual efforts contribute to the overall savings. Generally a high volume value and quality aspects should have significant impact when prioritizing among the components. The result of this study suggests that pumps and valves should be prioritized.