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Contract Control

By Mark Roberti  |  Posted 11-01-2001 Print

Contract Control

Problem: Emerson's accounting staff had no way to know whether suppliers were giving divisions the contracted rate for goods sold.

Solution: MIN helps accountants spot overpayments. Example: Emerson Motor Co. was overbilled $328,000 on $50 million in purchases.

Payoff: No more overpayments and an estimated $3.5 million in companywide cost savings per year.

Inventory Reduction

Problem: In-Sink-Erator, a maker of garbage disposals, was buying some items at premium prices from local distributors and storing them indefinitely.

Solution: MIN identified the source of bloated inventories.

Payoff: All divisions now buy from lower-cost suppliers using just-in-time systems for inventory savings in the millions.

Pricing Power

Problem: Three of 18 factories run by Emerson's Fisher Valves division were buying the same 12-foot stainless steel tubing from two suppliers at three different prices.

Solution: MIN spotted the problem and the three factories pooled their purchases.

Payoff: Lower prices for raw materials—in this case, savings to the company of $45,000 on one order.


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