Complexity Management with the K-Method (eBook)

Donald Kossmann (*1968) , received his Master in Computer Science (Dipl.-Inform.) from the University of Karlsruhe in 1991. He completed his PhD (Dr. rer. nat.) at the RWTH Aachen and his habilitation at the University of Passau. Since 1998 he has been Professor at the TU München, University of Heidelberg and finally at the ETH Zürich. Since 2014 he works as Research Director for Microsoft in Seattle.Daniel Kossmann (*1964), received his Master in Computer Science (Dipl.-Inform.) from the University of Karlsruhe in 1989. From 1989 to 2007 he worked for Unilever in various positions in Hamburg, Berlin, Warsaw and Paris. Among these positions he has been Head of Supply Management, Head of Management Accounting, and Finance Director for European Supply Management. Daniel Kossmann works since 2007 as a freelancer and consultant.  

Preface 8
Acknowledgements 10
Introduction 12
Contents 14
Part I: Introduction 17
1: Definitions and Typical Issues 18
1.1 FMCG 18
1.2 Complexity 19
1.3 Packaging Materials 20
1.4 Major Issues 20
2: The K-Method, Example of a Price Formula 22
2.1 One Single Price 22
2.2 Fair Price for Each Packaging Item 23
2.2.1 Consistent Prices for Individual Specification Attributes 23
2.2.2 Consistent Margin of the Supplier When Quoting Prices for Specification Features 24
2.3 Method to Create a Price Formula 24
2.3.1 Selection of Specification Features 24
2.3.2 Example 25
2.3.3 Summary 35
3: Solutions for Major Issues Using the K-Method 37
3.1 Feedstock Materials 37
3.1.1 The K-Method for Feedstock Materials 39
3.2 Internal Benchmarking 41
3.2.1 The K-Method for Internal Benchmarking 42
3.3 New Price 43
3.3.1 Agreeing to a New Price 43
3.3.2 Process of Defining the Price 45
3.3.3 The K-Method for New Prices 46
3.4 Tenders 47
3.4.1 The K-Method for Tenders 49
3.5 Lot Sizes 50
3.5.1 The K-Method for Lot Sizes 51
3.5.2 Reach 51
3.5.3 Obsoletes 53
3.6 Combination of Packaging Items 55
3.6.1 The K-Method for Combining Packaging Items 55
3.7 Dimensions of a Moulds 55
3.7.1 Applying the K-Method for Dimensioning Tools 56
3.8 Supply Management Finance 57
3.8.1 The K-Method for Supply Management Finance 58
4: Why Should a Company Introduce the K-Method? 59
4.1 Buyers´ Concerns 59
4.1.1 General Working Procedures 59
4.1.2 Renegotiations 60
4.2 Common Concerns of Buyers and Suppliers 61
4.2.1 Effort and Project Management 61
4.3 Concerns of Suppliers 62
4.3.1 Transparency of Costs 62
4.3.2 Inaccuracy 63
4.3.3 Ability to Combine 63
4.3.4 Confidentiality 64
4.3.5 Too Small Portfolio 65
4.3.6 Dominance of the Supplier 65
4.3.7 Advantages for the Supplier 65
5: The K-Method in Other Industries 68
6: Outlook on Advanced Technologies 71
6.1 White Label 71
6.2 Transfer Prices 71
6.3 Configurators 72
6.4 Master Data 72
Part II: Elaboration 74
7: Specific Issues When Designing a Price Formula 75
7.1 Transportation 75
7.2 Storage 76
7.3 Terms of Payment 77
7.4 Consignment Stock 78
7.5 Delivery Tolerances 79
7.6 Optimising the Number of Items During a Production Cycle 80
7.7 Lead Times and ``Emergency Call-Offs´´ 81
7.8 Negotiation Cycles 82
Part III: Implementation 84
8: Implementation in the ERP System 85
8.1 The Complete Business Process 85
8.2 Specification Features 85
8.3 Storage of Prices 87
8.3.1 Price Terms 87
8.3.2 Standard Prices 89
8.3.3 Planned Prices 89
8.4 Material Planning: Call-offs and Purchase Orders 89
8.4.1 Material Resource Planning 90
8.4.2 Format Group: Setup Versus Changeover 90
8.4.3 Purchase Orders 91
8.4.4 Invoice Control 92
9: Specification Features of Selected Categories 93
9.1 Labels 93
9.2 Plastic Tubes 93
9.3 Corrugated Outer Cases 95
Part IV: Theoretical Fundamentals 97
10: Value Analysis 98
10.1 Multilingual Labels 100
11: Scaled Prices 102
12: Consistent Prices 105
13: Derivation of the Price Formula 108
13.1 Data Types of the Specification Features 110
13.2 Linear Functions and Discrete Functions 112
13.3 Summary 112