AIMDRIVE-AI

  Question: Hi, I was recently hired into a procurement role and my manager gave me the task of reducing costs across our suppliers . I’m newly out of university and haven’t had a lot of real world experience and my manager hasn’t been really helpful here in giving my guidance. I’m able to see some basic spend analytics across my suppliers but super out of my depth here in terms of cost reduction. Should I be trying to negotiate contacts? Consolidate suppliers? Any sort of framework or advice would be helpful, I’m really struggling thank you! AIMDRIVE-AI Solution: Use a combination of price and cost intelligence and analysis and proactively engage suppliers in cost-based discussions and negotiations. For example, adopting a fact-based approach for assessing supplier price increase requests has yielded many cost avoidances/reductions. I would engage in the following analysis every time I deal with a supplier price increase request to identify whether the price increase is justified:...

In a time of rising costs and inflation, my company has set a goal for me to reduce material costs by 7% — which feels nearly impossible. On top of that, I’ve inherited a situation where previous cost-saving reports were overly optimistic, and now I need to re-bid 85% of our material costs for the year with suppliers who have never held their pricing. Question: How is everyone else managing material costs this year? Are you seeing any opportunities for real savings? AIMDRIVE-AI Solution: This could look impossible at first, especially in the current environment where many factors outside our control drive material price inflation. But even with rising prices, there are still ways to find cost reductions — if you’re willing to challenge the status quo. A few angles to explore:   In a time of rising costs and inflation, my company has set a goal for me to reduce material costs by 7% — which feels nearly impossible. On top of that, I’ve inherited a situation where previous cost-saving...

Hi all, I’ve been a buyer for a few years now and this part of the job I really struggle with. In other words, when comparing quotes on a part, I don’t want to simply select the cheapest bid, anyone can do that. I want to be able to look at a cost breakdown and be able to read between the lines and find cost reduction opportunities on my own. Additionally, it would be great to understand how profit margins work, to understand if and how profit margins fit into shop rates, if a shop rate/PM is good or bad, etc  Question - how where what is the best way to learn about these concepts?  AIMDRIVE-AI Solution: Suppliers typically do not share the breakdown of their price, however breaking down their price into material cost, labor cost, overheads and profit can reveal cost management opportunities. Building a should-cost model based on industry benchmarks can help estimate what the price should be. Presenting this data encourages suppliers to clarify their pricing, leading to better...

  Question to buyers or any procurement or supply chain managers : What is your strategy to keep material cost at current or below planned cost? AIMDRIVE-AI Solution: Use a combination of price and cost intelligence and analysis and proactively engage suppliers in cost-based discussions and negotiations. For example, adopting a fact-based approach for assessing supplier price increase requests has yielded many cost avoidances/reductions. I would engage in the following analysis every time I deal with a supplier price increase request to identify whether the price increase is justified: 1. Price Analysis:  Look at benchmarks related to the trend in price changes over time. This is sometimes sufficient to identify whether the price increase request is justified. 2. Cost Analysis:  This is especially relevant and a must-do after Price analysis is performed, for purchases that are non-industry standard (purchases for which there is no industry benchmarks available because few...

What are some effective cost-saving strategies you've successfully implemented in your company? I’m curious to hear about real-world strategies that have helped companies achieve significant cost savings. In my experience, a lot of cost reduction efforts revolve around switching from one supplier to a more cost-effective alternative. While this approach has proven valuable, I’d love to open a broader discussion on other successful methods. Have you implemented innovative procurement strategies, optimized logistics, renegotiated contracts, streamlined processes, or leveraged technology to drive savings? What challenges did you face, and how did you overcome them? Looking forward to hearing insights from professionals in this space! AIMDRIVE-AI Solution: Adopting a fact-based approach for assessing supplier price increase requests has yielded many cost avoidances/reductions. I would engage in the following analysis every time I deal with a supplier price increase request to iden...

  Question for Buyers : If you started at a manufacturing company, one that hasn't historically been very good at data analyzation, and you wanted to not only get on track with analyzing all necessary information but also look for cost savings, how would you approach this? I should add that the ERP system is archaic so most analyzation is performed in Excel. What data would you want to see first? What data would you deem absolutely necessary to track on an ongoing basis? Where would you look for cost savings first (or second, third, etc)? I have been a Buyer, or in a SCM role, for 15+ years total, and this is a situation I found myself in not long ago. While I feel confident in what I've done, and received positive feedback, I'd like to know how others would have tackled this.  AIMDRIVE-AI Solution: Once spend analysis is performed and major categories of spend are identified, we would engage in the following analysis for each major category first, then tackle the medium on...

How to get a supplier to share a cost breakdown of their price? Solution:  This can be assessed with  AI MDRIVE- AI  Cost Analysis. Visit   https://aimdrive.com/   to perform  AI MDRIVE- AI   Price Analysis  and   AI MDRIVE- AI   Cost Analysis S uppliers  usually do  not share  their cost as they deem it to  be  confidential. This is a very com mon roadblock  faced by  B uyers and  can be  addressed with  AI MDRIVE- AI  C ost  A nalysis .   AI MDRIVE- AI Cost Analysis A sk the supplier to provide a breakdown of  their  price  into the following  five  elements , clarifying   th at the purpose is to  embark on a cost management journey   and  that  this information will be treated  as highly confidential. Also ask them to clarify  what should and should not go into  each   “ bucket ” :   Direct Materials D...