Remember the Material Cost Reduction (MCR) project?  Well I am happy to report MCR is alive and well at our member stations.  I remember a face-to-face meeting in year one of the project back in 2017 and Tim Rausch, Susquehanna CNO and USA BOD chairman, asked me how we are planning to institutionalize the tools and concepts for the MCR project.  My response was probably less than adequate, but I do have the following report to show that MCR concepts, tools and savings are still being used and recognized 10 months after we officially ended the project funding on 12/31/19.

For those that have known me for a while know that inventory optimization is a real passion of mine.  One tool that we implemented during the MCR project was buying and selling surplus inventory within our alliance and throughout the industry.  When our members buy and sell surplus inventory from each other it creates a win/win of savings.  The selling member typically sells the inventory at book value which provides a cash return and inventory reduction TCO to the selling member.  The purchasing member typically buys the part at a lower price than they would have paid through normal supply chain processes and typically provides the member a unit price cost savings.

Today I would like to focus on the inventory reduction savings documented so far this year with the members.  Paragon, one of our USA supplier-partners, has been working with our members since the beginning of the MCR project to create processes that facilitate the buying and selling of inventory within the alliance and the industry.  Paragon provided an update I would like to share that shows the growth and future potential for our members in this area.

Since June, Paragon has documented $525,229 in USA TCO inventory reduction.  The Paragon total for 2020 inventory reduction thus far is $1,144,591.  The data analysis showed that 98% of the USA purchases came from overstock and surplus member inventory.  The chart below shows the progress made in this area since we began tracking inventory reduction when the MCR project began in 2017.

It is exciting to see these results and I encourage all our members to continue to utilize the MCR tools and processes we have put in place to increase member savings.