Duplicating Procurement Savings

Xerox makes cost-estimating software available to other manufacturers under license deal

Rochester, NY  October 25, 2002  Cost-estimating software developed by Xerox Corporation to drive down its manufacturing costs will now be available to other manufacturers through eTrack Solutions under an exclusive worldwide licensing agreement signed by the two companies.

Xerox says that the cost-estimating software allows supply chain managers to develop and compare manufacturing costs on a global basis. First used in Xerox's European manufacturing operations about five years ago and since then deployed to Xerox locations worldwide, the document company claims it has resulted in year-over-year procurement cost savings of up to 10 percent in selected product lines.

"Using this cost estimating software has allowed us to develop target costs and use that knowledge in our negotiations with vendors to intelligently source parts," said David Partridge, Xerox's manager of global purchasing product cost engineering. "Making the data and know-how we developed available to others through eTrack is in line with Xerox's overall goal of maximizing the value of its intellectual property."

"The software will offer substantial productivity benefits to companies in the mechanical and electronic industries who have no other way of knowing and comparing costs in other countries," said Tony Mazzullo, president of eTrack Solutions.

The solution includes a database that Xerox says allows for an "apples-to-apples" comparison of not only current geographical material costs and machine-hour rates but also assembly, freight and packaging expenses and import duties, if any.

The knowledge base has costs for the Asia-Pacific, Eastern Europe, Western Europe and U.S regions. It covers an array of materials, including plastics, sheet metal, turnings, extrusions, powdered metals, wire harnesses, circuit boards and power supplies, as well as a variety of fabricating machinery.

eTrack says its customers will be able to populate the database with their own vendor-specific cost information and develop worldwide benchmarks for the lowest manufacturing and assembling costs in preparation for negotiations with their suppliers.

Under the agreement, Xerox will maintain the global knowledge base and provide ongoing consulting assistance to eTrack customers. eTrack has taken over maintenance of the software for Xerox and is converting it to a Web-based application that will be available to other companies under the name Global-PCE Product Cost Estimating Solution. The value of the agreement was not disclosed.

eTrack Solutions is a wholly owned subsidiary of Manchester Technologies, an operations consulting, information technology and Internet solutions company.