Cost is Our Enemy; We Must Always Be On The Attack!
We believe that we all realize as businesspersons that, “Cost is always our enemy and we must always be on the attack”. This truism is especially important to ponder now that your price savings are slowly disappearing, and standardization has been achieved in most of your categories of purchases. To maintain your supply expense savings momentum, where do you go from here to keep your supply savings humming in the new global economy?
Cut Your Supply Chain Waste to The Bone
Big price savings are a thing of the past! No longer can you count on price to put you into the next savings bracket. Rather, the way of the future is supply utilization management, which can help you cut your supply chain waste and inefficiency to the bone and find hundreds of thousands, even millions, in hidden savings. Consider this:
- Price increases are eating into your profit margins and won’t slow down anytime soon.
- Standardization saves you money up to a point. Then, it starts to cost you money – big time!
- Not everyone needs the same functions and features on their products, services, and technologies.
- There are lower cost alternative products, services, and technologies that you aren’t buying that can save you tons of money.
- Products, services, and technologies that are defective are being used by your staff at a cost of three-times your purchase price.
These are just five reasons why the future of supply chain expense management isn’t about price any longer (price at the pump), or even standardization, but it’s all about managing and controlling the in-use cost of supplies at your organization (miles per gallon).
The Future of Supply Expense Management
The answer to this dilemma is that there is still one big supply savings category left to be attacked in your supply chain expenses that hasn’t been aggressively tapped into by most corporations: Supply Utilization Management. This new supply chain discipline is akin to the concept of “conformance to requirements” to ensure the appropriateness, timeliness, necessity and efficiency of the products, services and technologies that your division heads and managers have been requesting or making use of in their departments conforms to requirements. To receive the full payback of this powerful cost control methodology, businesses now need to enlarge their utilization management scope to encompass the products, services and technologies they are buying. It’s a natural, logical and money-saving evolution from what you have already been doing for decades.
Why We Have Ignored Supply Utilization Savings
For years, those of us in business have mostly skirted around supply utilization management. Because there have been so many other savings opportunities, we haven’t had to invest our time in supply utilization management.
But times change, and lately, we’ve seen our price, standardization and contract savings evaporating. Sure, we all love to pluck the low hanging fruit, because it requires less effort and tastes just as sweet as that on the higher branches, but once those lower branches are barren, none of us will choose starving over getting out a ladder and reaching for the higher fruit.
It’s definitely time to get out that ladder. Our studies show that 79% of all new supply chain savings reside in utilization. This means that there is 5% to 17% more savings to be harvested. Examining these numbers, we can see that those savings aren’t “fruit” we can afford to leave unpicked.
As a thirty-seven-year veteran of the supply chain management community, I was surprised fifteen years ago when I began realizing that newly uncovered savings weren’t coming from price, but rather from eliminating waste, inefficiency, misuse, and value mismatches of the products, services and technologies organizations were employing.
No Where Else to Go For Double-Digit Savings
We would all like to think that price savings are never-ending, but after decades of your own supply chain staff pounding away at your suppliers for more savings, there is little left for suppliers to give on price concessions. From our perspective, there is nowhere else to go for double-digit supply chain expense savings other than attacking your utilization misalignments. This can yield, on average, 26% on any commodity group that you target for investigation and 5% to 17% overall on your supplies and purchase services.
UtilizerDashboard™ to the Rescue!
Realizing that utilization management is the future of supply chain expense management, we introduced the UtilizerDashboard™ 12 years ago to the marketplace with great success. Therefore, this may be the exact tool that you have been searching for to quickly uncover your utilization misalignments in less than 45 days.
The best feature of our UtilizerDashboard™ is that we have developed automated systems to collect your data and assemble it into our data warehouse that we call the UtilizerDashboard™ engine. This engine is the master file in which all of your “real time” purchase history, key performance indicators, metrics and statistical information is stored, processed and analyzed. The result: We do all the heavy lifting while you reap all of the savings.
And that’s not all! Our 12 years of supply utilization research and development of the UtilizerDashboard™ has provided us with an invaluable component that is often forgotten in many sophisticated analytical systems: The translation of the data! We therefore will not only manage your supply utilization system, but we will also coach and guide your supply chain staff through the translation, strategization and implementation of your identified savings to ensure you receive the full benefits of our system. In essence, our best practices become your best practices!
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