The most-sought and most common result of every business organization applying Strategic Supply Management or Supply Chain Management is to reduce costs in the supply chain in order to create Economic Value.
The fact must be kept firmly in mind when analyzing for potential sources of savings. To the extent that the same customer satisfaction can be achieved at lower total cost, additional economic value is created. The additional value may go to the customer in the form of a lower total cost, it may go to the seller in the form of higher profits, or it may be shared by both entities. In the process of increasing economic value, supply management is most often looking to lower costs throughout the supply chain.
Our logistic consultants will prepare a strategic plan for improving your operations, which will include projections of savings and service benefits to be realized when the plan is implemented. Following you approval of the plan, we will begin working to implement positive changes produce the expected benefits, and we will monitor the performance of your newly streamlined operations to make sure your company stays on track.
GSMkonsep Internasional can help your company to increase its Economic Value through the development of a formal Cost Savings Program. In a recent study conducted by the Aberdeen Group, they cited that most companies with formal Cost Savings Programs have identified savings equal to 11.9% of their annual expenditures and have implemented savings equal to 9.4 %. This is only an average cost savings percentage but the range most quoted extends from 5% thru 25%! The basic message is that if your Procurement function does not have a formal Cost Savings Program and it is not achieving a savings percentage equal to 9% of the company’s annual expenditures, you should seriously consider GSMkonsep’s approach to raise the Economic Value creation within your company.
Six Best Practices In Cost Savings
Fortunately, while demanding large, repetitive cost reductions from their purchasing and supply management functions, corporate leaders also recognize that delivering big cost reductions year after year requires them to do much more than simply demand price reductions from suppliers.
The following six common practices routinely deliver substantial savings:
The GSMkonsep process for developing a formal Cost Saving Program will guide you through each of these steps in a process and people friendly methodology to deliver the optimum value to your company.