Being the master of your expenses is probably more crucial now then ever before. You might be aware of some solutions but are you sure to cover the complete spectrum of cost-reduction methodologies for your business? The extensive field experience on cost cutting is one of the advantages of using a supply chain consultancy. Who else would be able to explain and support you to tailor-made the best possible actions for your company?Commonly used ways to eliminate and avoid high costs ramping up are: • Incumbent negotiations • Re-sourcing activities • Outsourcing • Value Analysis/Value Engineering • Simultaneous Engineering • Standardization Exercises • Reverse Auctions (On-line bidding) • Purchasing Pools • Clear Target settings • Low Cost Country Sourcing • Cross-functional Process Improvements • Rebate Systems • Firm Vendor Contracts • Demand Management Analysis • Etc.

Just knowing these is of course not enough! However, bringing and using these in the right context creates a strong value for clients. Understanding the differences between for example the automotive and the pharmaceutical industry is essential!

Some thoughts and guidelines to consider strongly: • The feasibility to use a certain method depends on the scope, situation and vertical • Screen the whole supply chain and the timeline from creation over delivery up till follow-up services • Think out of the blue and challenge your customers by asking “Why? What for?” • Neglect conservatism of people, road-blocking your idea and approach • Be aware of the “things to do” for each opportunity and figure out the potential reactions and consequences • Develop your contingency (plan B) • Empower your supply base to be supportive • Assure a strong relationship with the sales & marketing team • Why would you need a golden pump when a bronze one complies with the specifications? • Certainly evaluate to use an on-line bidding process for “first ever” evaluations • Are you the specialist of product X or is this more core competence for your supply base? • Push your suppliers to provide support on your standardization process • Use your suppliers as “mirror” for bench-marking activities It is not the hairdresser but the astronauts landed on the moon! Hope you are convinced that every field has his experts …. . and there are many advantages of using a supply chain consultancy for efficiency and cost savings.

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Article Source:China Sourcing Blog

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