Procurement Services experts

Overview

You have done the hard part of developing a group wide sourcing strategy & successfully implementing your new preferred supplier arrangements. Time to sit back, pop the champagne & move onto the next project? Not quite. Developing a successful sourcing strategy should be the start, not the end of your cost savings journey. There’s no doubt that developing a supplier sourcing strategy is generally where the lions share of savings are generated, however there are ongoing, significant cost savings opportunities available through ongoing cost optimisation. Lets look at 8 strategies for delivering ongoing cost savings.

Product Standardisation

By standardising products your product list is substantially reduced, leading to economies of scale for suppliers & less rouge purchases of high end products.

Fit for purpose specifications

Reviewing specifications so they are fit for purpose ensures that products are not over specified & therefore costing more than they should.

Review existing policies

Ensure policies are in place that are sensible, reasonable & practical, but also minimise business costs. Easy examples include asset replacement policies, access to premium services, etc.

Validate invoiced pricing

By checking invoiced pricing against the contracted rates you can ensure that the right rates have been applied. This is very pertinent at the start of new agreements & after price reviews.

Optimise supply & demand

This applies particularly to recurring services such as waste, site maintenance etc which can be auto-supplied. Ensure that supply of services matches required demand so that only the exact level of services are obtained. 

Eliminate unrequired services

Ensure that invoiced services are actually required & being used. There are numerous examples of a service being supplied that is not required & could be discontinued for immediate savings. 

Focus on reuse & recycle

There are many products that have value as a recycled product that other businesses will pay money for, however many people are ok with having them collected for free. By focussing on recyclable products, organisations may find opportunities to receive money in return.

Investigate bulk purchases

Many suppliers offer discounts for bulk purchases, however unless this information is supplied to purchasers then the discounts are never obtained. By reviewing purchasing patterns & analysing optimal purchase levels additional savings are available.

Conclusion

The opportunities for additional savings after contract shave been awarded are significant. By having a clear plan, assigning accountability & maintaining focus can lead to sustainable, ongoing savings.

Spend Solutions are the leaders in cost optimisation reviews for large organisations. For more information on conducting cost optimisation reviews, click on the link.