Materiel: Cost Reduction

Bell Helicopter's annual cost reduction requirements are 6% or more per year incremental. Cost reductions are to be captured and reported in two ways: Economics and VA/VE or Effective Cost Reduction Programs.

Economics

It is imperative that suppliers achieve internal economic cost reductions and reduce their selling price by a minimum of 3% annually, effective January 1st of each year.

Value Analysis / Value Engineering or Effective Cost Reduction Programs

Suppliers are to submit VA/VE cost reductions relative to any part of their supply that will directly or indirectly reduce their cost or the cost of their supply chain by 3% or more annually.

Suppliers of direct production materiel and components are required to have a system to identify, record, and monitor costs on a regular basis for all products manufactured and/or purchased as well as for all services provided and/or purchased. This system shall include, but not be limited to:

  • Manufacturing costs
  • Quality costs
  • Delivery costs
  • Purchasing costs
  • Overhead costs
  • Engineering and design

These costs shall be reported using a standard scorecard jointly developed by Bell Helicopter VA/VE Supply Management and supplier(s). Suppliers must be capable of documenting purchasing, manufacturing and overhead costs as well as markup percentages in Bell Helicopter's standard format per the RFQ Piece Price Worksheet for components.

Implemented cost reduction proposals that are quantified to be in excess of 3% of annual supply may be applicable to future year VA/VE requirements or scored as extra credit in the cost reduction portion of the Supplier Performance Measurement and Recognition.

Suppliers may receive (soft) or additional VA/VE credit by incorporating these production opportunities:

  • Payment Terms
  • Weight Reduction
  • Volume Efficiency
  • Freight/FOB changes
  • Complexity Reduction
  • Manpower effect (Bell Helicopter Plants)