Cost Savings
Part 2 – Buyers Guide to Cost Savings
Our last post on spend analysis was part 1 of our cost saving series and we are going to stay focused on this topic by providing areas to save money both within and outside of your organization.
We noted the importance of going after your class “A” Vendors or your top 20 which account for 80% of your spend. This is our target list and we will review how as a Buyer you can better leverage your vendors experience to help you generate cost savings.
In this scenario, your pricing on products you purchase is acceptable and lets assume they are under contract. Now where do you turn to find the next round of savings? More cost savings can be found in your suppliers’ organization. Pardon…you want me visit my suppliers and tell them what they can do to reduce costs so I can get a better deal? Not at all, we are suggesting you get into the heads of their technical and support staff to mine their knowledge, experience and ideas.
Your Vendors are in an excellent position to help review your processes and reduce your costs for the following reasons:
- They have a long list of clients which use their product and have experience and knowledge of potential best practices. This can be useful information. While asking vendors to divulge proprietary information is not appropriate, you can ask for suggestions on what we can do better. Keep in mind Vendors would rather you seek cost savings elsewhere versus from their pocket so they should be quick to jump on this approach.
- The technical knowledge of their own products. There is no better source to suggest alternative specifications or practices which can reduce expenses without sacrificing quality.
- They are a known entity.
How do you approach this? (more…)
