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BACKGROUND

To remain competitive, PPG Industries must continuously improve and add value for our customers. Our suppliers are a critical link in the supply chain which we define as "One System": Suppliers-> PPG -> Customers. Since over sixty percent of every sales dollar is attributed to materials, transportation and services, our supply relationships offer the greatest potential for adding value through innovative and effective cost management throughout the supply chain. To better realize this potential, PPG has implemented the Supplier Added Value Effort ($AVE) process. In brief, $AVE is a sustainable, supplier-driven, cost-reduction process that measurably improves PPG’s, its suppliers’ and its customers’ competitiveness. The program is designed to:

  • build closer relationships with our suppliers;
  • reduce material and total supply chain costs;
  • improve quality, technology and cycle time;
  • promote continuous improvement. 

GOAL

 
PPG works to reduce costs through the effective use of the Quality process, of which $AVE is an integral part. Through the $AVE process, suppliers are challenged to implement annual value-added/cost saving proposals equaling at least five percent, or higher, as dictated by PPG’s business needs. The goal is based on the supplier’s total company global annual sales to PPG.

BENEFITS

$AVE will provide benefits to both PPG and our suppliers. Mutual benefits are essential to the success of $AVE. Key benefits of the process are:

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  • Promotes new ways of doing business.
  • Consolidation of supply base.
  • Cost savings resulting in lowest total cost.
  • Better understanding of customer needs.
  • Efforts focused on value-added activities.
  • Improves product consistency.
  • Opportunity to grow share.
  • Clearer definition of requirements.
  • Opportunity to grow together globally.
  • Enhanced business relationships.
  • Improves teamwork and partnership.
  • Opportunity to share best practices.
  • Improves insight into marketplace opportunities.
  • Tool to measure performance.

 























OPPORTUNITIES


PPG expects suppliers to submit proposals that will result in significant, measurable cost reductions, including those that challenge traditional thinking. $AVE Opportunities are designed to achieve added value and to reduce costs for both PPG and the supplier. Although $AVE Opportunities include direct (bottom line effect) and indirect value propositions, emphasis should be placed on those Opportunities where direct savings can be realized. The following are some examples of $AVE Opportunities:


Commercial Business Process Improvement
  • Unique Discounts and Reductions
  • Rebates
  • Supplier Provided Financing
  • Consortium Procurement
  • Minority Vendors
  • Transaction Paperwork Elimination
  • EDI/EFT
  • E-Commerce
  • Payment Based on Receipt
  • Improved Payment Terms
  • NAFTA Certificate
  • Duty Reduction & Drawback
  • Sharing Best Practices
Technology Innovation Supply Chain Logistics
  • New Products
  • Enhanced Performance Properties
  • Exclusively Designed Products
  • Mat’l Optimization/Substitution
  • Product Simplification
  • Shared Resources
  • Value Engineering & Analysis
  • Material Handling
  • Packaging Optimization & Recycling
  • Transportation
  • Logistics Optimization
  • Bar Coding/Labeling
  • Waste Elimination
Operating Process Improvement Inventory Management
  • Equipment Innovation
  • Cycle Time Reduction
  • Process Redesign
  • Yield Improvements
  • Capital Investment
  • Energy Reduction
  • Waste Minimization
  • Sharing Best Practices
  • SOI (Supplier Owned Inventory)
  • SOMI (Supplier Owned & Managed)
  • JIT
  • Material Consolidation
Quality Global Initiatives
  • Reduced Product Variability
  • Global Specifications
  • Quality Certification
  • Local Availability/Support/Service
  • Worldwide Regulatory Compliance
  • New Business Opportunities











































PROCESS


  • Supplier submits a $AVE Proposal directly to the PPG Purchasing contact. The proposal should clearly identify the value and savings shared with PPG. Proposals are to be submitted through the PPG $AVE internet site at www.ppg.com.
  • PPG reviews proposal to determine acceptability and value. Suppliers are encouraged to actively monitor and participate in this evaluation.
  • PPG Purchasing notifies the supplier of the final determination of all proposals.
  • Supplier and PPG plan and implement the proposal if accepted.
  • Supplier and PPG will monitor implementation progress and measure results.
  • PPG recognizes top performing $AVE suppliers and also incorporates $AVE as an important factor in the Excellent Supplier award program.

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