Purchasing Catch Up On 2013 Cost Savings Goals
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Purchasing Catch Up On 2013 Cost Savings Goals

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Informal 2013 Mid Year data shows many Purchasing Departments coming up short on planned cost savings goals. The good news is there seem to be a good chance to recover in the second half of he year. ...

Informal 2013 Mid Year data shows many Purchasing Departments coming up short on planned cost savings goals. The good news is there seem to be a good chance to recover in the second half of he year. A variety practical approachs are provided to increase saving for the remainder of 2013.

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    Purchasing Catch Up On 2013 Cost Savings Goals Purchasing Catch Up On 2013 Cost Savings Goals Presentation Transcript

    • CATCH UP ON 2013 COST SAVINGS GOALS Practical Suggestions on how Purchasing departments can catch up on cost savings goals. Bill Kohnen **** WARNING NOT All SUGGESTIONS ARE FOR THE FAINT OF HEART **** Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings
    • 0 2 4 6 8 10 12 14 Q1 Q2 Q3 Q4 Cost Savings Goal Actual MID YEAR REVIEWS OF SPEND AND GOALS HAVE PURCHASING DEPARTMENTS COMING SHORT ON COST SAVINGS GOALS Good news is second half looks better for cost savings but still will need to make up ground from early in the year. Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings
    • • Contract and Purchase Order Opportunities • Supplier Based • Forward Looking • Very Aggressive Techniques AREAS TO APPROACH Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings
    • Action Savings Potential Negotiate blanket orders for balance of years non contract consumable requirement 5% Pull ahead negotiations for contracts set to expire in Q4 and negotiate immediate savings for 18 month renewal 5% to 7% Auction balance of years requirements for multi sourced items 10% Constrain and consolidate orders and time release at end of suppliers fiscal month or quarter and ask for additional discount 5% CONTRACT AND PURCHASE ORDER OPPORTUNITIES Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings
    • Action Savings Potential Auction balance of years requirements for multi sourced items 10% Look to alternate suppliers for items sold via distribution. 5% Consider working with independent broker. 5% Locate end users with excess inventory 20% SUPPLIER BASED ACTIONS Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings
    • Action Savings Potential Where there is no contract in place simply send out orders at a price lower than quoted or on the requisition. See if the supplier will accept once they have order in hand 10% For single source supplier approach them and say planning has started about where to devote resources to develop additional sources to reduce cost, mitigate risk and improve performance. If they reduce price proactively they will stay off list or at the bottom. 5% Review savings metrics calculations and assumption. If on the conservative end of continuum move towards more aggressive savings calculation as long as still reasonable 3% If supplier supporting multiple divisions have them subsidize savings at one division based on business elsewhere 8% Decrease pay terms for additional discount 2% Use PO and direct pay rather than PCard 2% VERY AGGRESSIVE STEPS TO TAKE USE WITH CAUTION Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings
    • Action Savings Potential Put in place cloud based indirect purchasing tool/marketplace (some are free or very low cost with fast startup) 10% Require immediate cost savings for consideration for new opportunities 5% Look outside of normal categories for potential low hanging fruit in unmanaged spend categories 10% Move forward on qualification of alternate suppliers and start taking “risk materials” for a portion of total requirements 5% FORWARD LOOK APPROACHES Bill Kohnen 7/2013 Mid Year Actions to Improve Cost Savings