Goodyear Tire & Rubber Co. has provided more details about its recently announced $1 billion “cost reduction plan.”
In a presentation posted on Nov. 15, the Akron, Ohio-based tiremaker said 40% of that amount will come from “footprint actions and plant optimization,” including:
- Increased product standardization “and fewer changeovers,” as well as “enhanced predictive maintenance, labor productivity and ongoing footprint actions,” and;
- SKU rationalization “to reduce complexity and enable increased plant efficiency.”
Thirty-five percent of savings will come from “reduction in raw materials costs via ‘clean sheet’ approach to identify and negotiate best-in-class prices; vendor (and) spend consolidation; rigorous, data-driven negotiations; and material substitution and consolidation.”
An additional 20% will come from “growth in low-cost/off-shore shared service centers, lean/best-in-class organizational structure for lower cost and increased efficiency, increased automation of transactions via IT/AI; and refined marketing.”
The remaining 5% will be driven by “digital inventory and logistics planning, virtual R&D prototyping and increased efficiency,” as well as the optimization of logistics “to reduce less-than-truckload shipments” and the establishment of “off-shore product development centers.”
The Akon, Ohio-based tiremaker announced its cost reduction plan yesterday as part of its new Goodyear Forward strategy, which also calls for incremental segment operating income gains of around $300 million through brand portfolio optimization and SKU rationalization, addressing low-margin business and expanding premium volume.
Goodyear Forward also calls for the divestiture of Goodyear’s OTR tire and chemical businesses, as well as the company’s Dunlop brand. (Click here to read more.)
