Cost Saving Initiatives in Purchasing & Supply

Course details

Purchasing has the ability to contribute to the financial results of any organization through a cost savings program. The course is an excellent way for Purchasing to gain the confidence of senior management. The course is presented in a practical way for purchasing heads to organize and operate a successful cost savings program. It includes goals, structure, necessary definitions, and suggestions of where to find savings and how to write meaningful reports.

A successful cost savings program is one that lowers purchase costs without reducing quality below the level required to meet end user needs. The program should ask the question what is the right quality. Often parts and materials are designed with a safety factor in excess of what will be required to perform the needs of the user. Once the minimum quality has been determined, no attempt should be made to compromise it. Additionally, delivery should not be compromised by reduced costs. It is important not to make reductions in purchase cost that will result in higher cost of freight, distribution, or after sale service and warranty costs.

Management support is critical for a successful cost savings program. No program can succeed without the funding, resources, and support of senior management. It is important that the Purchasing function be meeting its basic mission – the uninterrupted supply of materials and services meeting the required quality. Until management feels this is happening no cost savings program will have the support necessary for its survival.

The key to a good program is a sound cost savings plan. The plan must support the corporate goals, and purchasing management