Raw Material and Packaging Cost and Productivity Benchmarks

STUDY OVERVIEW
As energy and commodity costs continue to rise, manufacturing companies have looked to their supply chains to find additional means to reduce raw material and packaging material costs. Many companies have already picked the low-hanging fruit in supply chain savings -- such as economies of scale and consolidating sourcing -- and are therefore in search of other cost reduction measures.

This study explores how leading manufacturing companies achieve productivity gains through system approaches and innovations that reduce raw material and packaging material costs. Manufacturing executives can use the metrics in this document to see how they stack up against other companies' key cost, productivity and operational benchmark metrics. They can then do a gap analysis and identify their own areas of improvement.

KEY TOPIC AND METRIC AREAS
Each metric is reported separately or segmented into three groups based on total revenue in U.S. dollars: 1) less than $1 billion, 2) between $1-15 billion, and 3) over $15 billion.

• Defining Productivity: Percent (of Benchmark Partners) Including Various Factors as Part of Their Definition of Productivity:
• Material and Packaging Costs Metric: Percent Expecting Raw Material & Packaging Costs as Percentage of Total Revenue to Remain the Same in 2006 as it Was in 2005
• Cost Savings: Average Percentage of Annual Savings in Cost of Goods Sold (COGS)
• Distribution of Total Savings in COGS (e.g., Raw Material, Packaging, etc.)
• Delivering Productivity Goals: Percent Giving Responsibility for Delivering Productivity Goals to Various Teams or Areas
• Measuring Productivity: Percent Measuring Productivity by Various Teams or Areas
• Achieving Productivity Targets: Ranking of Activities to Achieve Productivity Targets
• Research and Development Resource Deployment: Percent Deploying R&D Resources to Achieve Productivity Targets by Various Teams or Areas
• Research and Development Resource Allocation: Percent of R&D Resources to Allocated to Productivity, Growth, Quality and Maintenance

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