Should Cost Reviews and Supply Chain Integration: A Case Study at ASSA ABLOY Entrance Systems

University essay from Lunds universitet/Institutionen för service management och tjänstevetenskap

Abstract: Abstract Title: Should Cost Reviews and Supply Chain Integration: A Case Study at ASSA ABLOY Entrance Systems Author: Andrew Cardinali Supervisors: Henrik Wallström - Ph. D., Candidate Packaging Logistics, Department of Design Sciences Faculty of Engineering LTH, Lund University Mats Johnsson - Ph.D., Associate Professor Packaging Logistics, Department of Design Sciences Faculty of Engineering LTH, Lund University Klas Hagelin - VA/VE Manager ASSA ABLOY Entrance Systems Problem Discussion: Competition in the global economy has lead companies to seek different ways to remain competitive and profitable. Growth though mergers and acquisitions and global sourcing are alternatives available to organizations to promote growth and reduce costs. The case study organization has chosen both methods as part of their business strategy. In addition the firm has recently implemented a strategic cost management program known as should-cost. This cost reduction method has received little attention in academic studies in general, and specifically, in regards to its relationship with the current concepts of supply chain integration. Furthermore it is considered whether this cost reduction program, in addition to its primary purpose as a cost savings tool, could promote integration and if so can the insights gained from the study be used to improve the should-cost program to further develop the integration process? Purpose: An exploration of the relationship between the strategic cost management program, known as should-cost, and supply chain integration is one aim of this study. Achieving this goal helps fill a gap in the relevant academic literature. An additional goal is to demonstrate how should-cost can promote integration within a firm. The final aspiration of this study is to use the results of the study to further develop should-cost not only as a strategic cost reduction method but also as an aid to integration. Method and Limits: This is an exploratory study and common with this type of research the case study method was chosen. Given the deductive nature of the paper a review of the relevant literature was the starting point of the project. From there data was gathered from multiple sources at the subject firm. The primary sources of data were interviews, documents and archival artifacts, and participant observation. This data was then analyzed in order to explore the issues raised in the problem discussion. The main limitation of this study is that interviews were primarily conducted with management personnel and not the purchasing staff. Conclusion: Should-cost was found to aid internal integration. In particular, by developing the knowledge and skills of the purchasing personal it was found to increase functional coordination and improve communication between functional groups. Additionally, by raising the knowledge and skills of the purchasing staff, should-cost promotes integration by raising the strategic value of the purchasing function. Although not a stated purpose of this study, should-cost, by revealing potential suppliers for improved relations via supplier development, aids external integration

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