In case you haven’t realized it yet, your price savings are slowly disappearing. In fact, our research shows that price savings nationally were less than 1 percent annually (supply chain expense budget/annualized savings) in 2020. On the other hand, our studies show that Savings Beyond Price™ can be as high as 64% annually. With this said, here are three of the best Savings Beyond Price™ strategies and tactics we know of that can up your savings game:
1. Supply Utilization Management: If we could show you where there are millions of dollars in supply chain expense savings in your supply streams, would you go after them? Well, this isn’t a theoretical question. It’s a reality check for those healthcare organizations who are looking to replace their price savings with new and better savings almost overnight.1
2. Advanced Value Analysis Techniques: One of the cost saving tactics of value analysis is to establish the exact specifications for a product, service, or technology being purchased through functional analysis. This is opposed to having the requesting department employ specifications from manufacturers’ catalogues, which too often contributes to value mismatches. It could be the difference of saving as much as 50% on your next purchase.
3. Life Cycle Cost Analysis: Life cycle cost, or the sum of the purchase price plus the subsequent cost of ownership (i.e., price, freight, installation cost, inventory, labor, overhead, consumption, and waste removal, etc.), over the life of the product, service, or technology can represent 100x the actual cost of the commodity. Therefore, life cycle cost analysis is an imperative if you are to control all of your supply chain expenses from birth to death.
I always like to say that Noah didn’t build his ark when it was raining. He had the foresight to build it before there was a flood. It’s the same with price savings; don’t wait until the well is dry! Instead, start experimenting with these three Savings Beyond Price™ ideas to keep your savings flowing.
1To learn more, e-mail for a copy of our e-book, “Supply Utilization Management: The Future of Supply Chain Management” at [email protected]
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