John Deere optimizes operations with supply management efforts

Recognizing that 70 percent of the costs of its manufactured products occur externally, John Deere has embarked on a series of supply chain best practices that is already producing millions of dollars of cost savings. Improved logistics at the company has reduced transportation costs, standardized shipping containers (reducing 43 types to three), and developed one order process companywide rather than having 20 factories use their own, different ones. Beyond logistics, Deere has formalized new strategies for selecting suppliers, creating lean supplies, managing supply chain costs, integrating supplies into the product development process, and utilizing e-procurement. These are all steps toward Deere's overall goal: to design products that delight customers at the lowest total cost and design out waste and inefficiency early in the product development process. © 2002 Wiley Periodicals, Inc.