Cost savings is something every procurement organization knows how to do, or does it? As long as businesses are in existence they will look toward procurement to deliver cost savings. The cost saving opportunities and requirements may vary by industry and, of course, by economic times, but in the end cost savings are a given output for procurement organizations.
Some industries like pharmaceutical, insurance and oil and gas until recently have left money on the table in terms of cost savings. The burning platform of company profitability has not been a driver for them since corporate profits have been so great. But when economic changes occur, cost savings become critical. In the last year, oil and gas prices have decreased substantially, reducing industry revenues and profitability. Re-enter cost savings focus and concerns in the industry.
Other industries such as retail, consumer products, manufacturing and telecom are constantly focused on cost savings. Cost savings are a way of life in these industries. Not only do these companies know the drill, but they also strategize, plan and are constantly looking for new avenues to take out more cost, including those that come from their customers, suppliers and competitors.
To be clear, industries have differing revenue, profitability spend and cost savings drivers. However, each industry shares four fundamental pillars they can rely on from their strategic procurement team:
- They know their business spend inside and out because they have automated the process.
- They drive cost savings across their entire value chain, horizontally and vertically throughout the business, customers and suppliers.
- They take their spend to a new level connecting complex categories and business objectives to reduce the total cost of ownership.
- They capture, track and report on the increased value generated.
Retail customers want the best deal possible and are willing to wait knowing their loyalty will be rewarded by loyalty cards with additional mark downs on products and further sales as the seasons end. In retail, strategic procurement teams know they can improve their business operating margins significantly by utilizing the four pillars of success and BravoAdvantage.
Telecom companies have saved as much 1.5-2X more than their peers when they utilize BravoAdvantage in their strategic procurement organizations.
Manufacturing organizations have leaned out their processes, their supplier’s processes, inventories and logistic strategies. All have brought great savings, but even greater cost reductions can be achieved when applying BravoAdvantage.
Consumer Packaged Goods
In the CPG industry it is all about the product and the package. Packaging is a key consideration for cost savings, as is the product formula, distribution and logistics and the supplier’s innovation. Strategic procurement teams utilizing BravoAdvantage have achieved significant profitability.
Cost savings can make or break business profitability. Cost savings can also reap rewards with new ideas from consumers, customers and suppliers that bring new packaging and products, positively impacting revenue and market share. While it all sounds great, applying it requires the right strategic procurement platform – BravoAdvantage.