Every organization is looking at ways to intelligently reduce costs –without creating an undesirable level of risk. One of the key focus areas in cost reduction is always procurement and inventory cost reduction, where opportunities for optimization exist in virtually every company. It’s only a question of whether you can actually identify them, how well and quickly you uncover them and how fast you can implement the changes that can deliver tangible savings.
Our approach to cost reduction is multifaceted, always assessing benefits against risk. The savings may come from different areas, such as reduced cost of sourcing, lower procurement overheads, efficient supplier rationalization, lower-cost alternate sourcing, increased spend visibility, improved vendor contract management or reduced inventory carrying costs.
Our consulting group does diagnostics for clients, to do a deep analysis of issues, to identify root cause issues. The strategy for cost reduction is developed as an outcome of the diagnostic exercise.
Typical flow of the initial diagnostic:
Audit and Gap Analysis >> Roadmap Development >> Industry benchmarking >> Risk Mitigation >> Strategy Recommendation
Process and Technology: Evaluate and implement the required systems and processes for optimization.
Purchase & Inventory optimization: Identify opportunities to consolidate material purchase across the enterprise, as well as optimize stock level based on criticality and lead times.
Vendor rationalization: Analyze different data points and spend patterns, to enable vendor consolidation and improve strategic sourcing, to reduce overall cost of procurement.
Alternate Sourcing: Identify commercially available lower cost alternates for OEM parts, as well as new options that can be made available via Low Cost Country Sourcing (LCCS).
Master Data Excellence: Ensure that the material and vendor master data within ERP/EAM systems are of high quality and can deliver desired intelligence and can support procurement optimization.
Spend Analytics: Enhance spend analytics capabilities, to provide insights into spend patterns, and identify opportunities for procurement and inventory optimization.
To learn more about how Enventure can enable you to reduce procurement costs and improve bottom-lines for you, speak to one of our Supply Chain Consultants today!