What are strategic procurement strategies with competency in supplier management and cost saving?



Procurement cost reduction and optimization strategies revolve around leveraging price and cost analysis to ensure payments are competitive, fair, and reasonable.

Price Analysis:

  • Compare prices paid by other buyers for similar purchases using market benchmarks.
  • Analyze price trends over time to determine competitiveness and identify cost-saving opportunities.
  • Tools like AIMDRIVE-AI provide real-time price insights, helping procurement teams assess whether their costs align with industry standards.

Cost Analysis:

  • Essential for non-standard purchases where industry benchmarks may not be available.
  • Start by understanding the cost structure of products or services in the industry.
  • Use this data to develop Should Cost Models, which estimate a reasonable price based on raw materials, labor, and overhead costs.
  • Comparing supplier quotes with these cost models helps identify potential overpricing and create negotiation leverage.

Collaborative Cost Optimization

  • Work closely with suppliers to identify cost-saving innovations.
  • Align incentives to ensure long-term cost efficiency rather than short-term cuts.

AIMDRIVE-AI simplifies these processes by offering visibility into cost structures, key cost drivers, and market trends, enabling businesses to develop strategic options for cost reduction and optimization. By combining price and cost analysis, companies can improve procurement efficiency, negotiate better terms, and maximize savings. 

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