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2 Powerful Cost Reduction Strategies In Purchasing

Presented By

Robi Bendorf CPSM, MCIPS, C.P.M.

Founder/Director of Bendorf & Associates

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1. Spend Profile ABC Analysis

1st: Sort Parts or Suppliers in descending order by annual spend2nd: Draw line when Accumulated Total % reaches 80%. Everything above line is "A" 3rd: Draw a line when Accumulated Total % reaches 95%. Everything between 1st & 2nd line is "B"4th: Everything after 2nd line is "C"

Supplier or Part Number

Description

Annual Spendfor Item/Serviceor Supplier

Accumulated

Total of Annual $

Accumulated Total % of Total Annual $ ABC

22 22 38.6614 36 63.2710 46 80.844 50 87.873 53 93.141 54 94.9.9 54.9 96.40.8 55.7 97.89.7 56.4 99.12

.5 56.9 100.00Total Annual $ 56.9

A

A

A

B

B

B

C

C

C

C

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Price

2. Resisting Supplier Price Increases

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To start with, just say -

“NO”.

“Not only can we not give you a price increase, we were just coming for a price decrease.”

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To start with, just say “No”.Demand from the supplier detailed and

documented support to confirm their reasons for requesting a price increase.

Analyze and verify increased cost with other sources. (Is this a legitimate reason?)

Counter with demands for supplier to initiate cost reduction program. Show them how!

.

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Watch the full video presentation that explains these & 4 additional slides not included here about how to do ABC Analysis, the reasons why suppliers ask for price increases & 3 more tips on resisting price increases.

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http://www.purchasing-procurement-center.com/abc-analysis.html

& key in your details on the right of the page to watch the video presentation