The Quantum Leap: Next Generation

Focus on Total Cost

In Demand Flow manufacturing, the emphasis shifts from the traditional, standard material cost of a purchased item toward the total cost of the part. Other costs in addition to the standard material cost must be considered. The costs of quality, transportation, packaging, setup, and carrying inventory are elements of total cost. The supplier with the lowest standard cost may not have the lowest total cost due to high rework, scrap, or transportation costs.

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