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Service Engagement
ENGAGEMENT SUMMARY
OVERVIEW
When a $400 million multi-national consumer package goods company sought to initiate a Direct Import program with it´s customers, they engaged the services of DIA to accomplish this objective.
The engagement focused on reviewing existing policies and procedures at the client´s U.S. facility, and analyzed how these procedures could accommodate the functions required to implement a Direct Import program. The current Operations, Finance, Administrative and Customer Service functions were reviewed. Based upon the outcomes of these reviews, specific recommendations were presented, which outlined changes and/or improvements needed to accommodate this program. In addition, DIA traveled to the company´s Hong Kong office to evaluate operations and to meet with third party vendors. Finally, a Direct Import training manual was prepared for the sales and home office personnel for reference purposes. A formal forecasting document and program was presented to the Operations team, to enable them to process customer orders in a timely manner, and to control work-in-process and finished goods inventory.
HIGHLIGHTS OF THE ACTION PLAN
Listed below is a summary of the major components of this engagement, as well as the recommendations presented to the client.
• Customer Quote Sheets: At the start of the engagement, the client prepared all customer quote sheets manually. Upon DIA's recommendation, an automated quote sheet system was in incorporated that nor only saved time, but also eliminated mistakes which would potentially result in costly customer chargebacks.
• Customer Order Status: No reporting system controls were in place to allow the client, or their customers, to know the exact status of a purchase order. DIA provided an automated system to provide this information at any given point in the order cycle. The dynamics of this system were designed to give the client the flexibility to sort this information by any desired data field.
• Letter of Credit Presentation: Recommendations were presented to the client that allowed them to collect payment on customer Letters of Credit 15 to 21 days sooner than what was currently happening.
• Tax Advantages: Recommendations were made to the client that would cut their effective tax rate from 35% to 17.5%.
• Product Development Improvements: Inefficiencies existed in the client's current product development cycle. From design phase development, through final production and quality assurance, all decision making was done at the client's U.S. headquarters, while actual development and production took place in China. The recommendation was made by DIA to shift decision making responsibility to the Hong Kong office, and to empower that staff to take corrective action at the source, which saved time and money.
• Demand Planning and Sales Forecasting: A single forecasting document model was presented to facilitate the demand planning and sales forecasting function. This provided the client with all related sales and operations information necessary to process production work orders more timely, and to improve control of work-in-process and finished goods inventory.
• Site Visit: A site visit was conducted at the company's Hong Kong office and at third party vendors to ensure staffing and procedural adequacy. This visit established clear lines of communication and proper procedures to insure the timely production and shipment of product to the customer's designated China/Hong Kong consolidator.
• Sales Pricing and Customer Allowances: A presentation was made to the client's sales and financial mangement teams to explain and illustrate the differences between Direct Import and Domestic pricing programs. Alternate sales programs were also presented that provide Direct Import cost savings to the customer, while insuring a profitable sales program to the client.
• Training Manual: A Direct Import Training Manual was prepared by DIA to serve as a ready source of reference for both the client's U.S. and Hong Kong offices on any related issues associated with a Direct Import program.
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