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College Student Saves Business Half-A-Million

Call it first time luck or the stroke of a genius, but one college intern has managed to save a business a half a million dollars, here`s hoping this internship was paid. A college intern, who was working part time at the John Deere Company, found a way to save the business $500,000 a year. This was discovered by Patricia Moody, author of the new book "The Big Squeeze: Ten Ways to Cut Your Company`s Expenses 10% Right Now!". Moody said that an executive needed to keep the intern busy and gave her the assignment to dig into purchasing data to see what savings suggestions she might come up with.

Apparently, no central data base existed to provide her with ideas, what items were purchased from which suppliers, or how much they cost over the life of many purchase orders. But the intern was persistent and creative. She found that by talking with key suppliers, as well as digging through accounts payable files, she was able to construct a pretty good picture of what the company was spending in different areas. One thick folder in particular drew her attention. She took a close look and found that in a twelve-month period, Deere?s fifteen North American plants had purchased more than 424 different SKUs of gloves at a total cost of $1.4 million. That?s more than 424 different part numbers for a supply chain planner to track, schedule, receive, pay for, and occasionally expedite.

Practically every order covered a different part number??different sizes, materials, linings, palm configurations, colors. And the prices ranged from $6.00 per pair to more than $7.50 for the same glove. A discrete call to the supplier revealed an even more interesting fact. The same welding glove that Deere bought for $7.50 was also being purchased by a big yellow competitor for $1.50. Plus Big Yellow washed and sent the gloves out to the line for other uses after welding, while Deere operators ran to the stockroom for a fresh pair after each and every use. Planners came up with a simple solution. They estimated that instead of 424 different SKUs, Deere production could easily ?make do? with only twenty-five varieties for an immediate savings opportunity of 35%, or about a half million of the 1.4 million dollars being spent on gloves.