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Savings from Supply Chain Initiatives

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  • Savings from Supply Chain Initiatives

Strategic Supply Chain Impact

Strategic supply chains dominate 50 to 70 percent of total costs. Achieve tangible financial outcomes by translating supply chain improvements with best practices. Align initiatives with corporate objectives, employ efficient methodologies, and track results meticulously for enhanced profitability.

  • Cost Reduction Strategies: Implementing efficient methodologies.
  • Performance Tracking: Monitoring supply chain enhancements.
  • Corporate Financial Impact: Tangible cost savings.

Ariba's Savings Pipeline Management

Ariba’s solution optimizes procurement processes by facilitating sourcing pipeline management, tracking savings initiatives, and providing actionable insights. Enhance efficiency, reduce manual errors, and gain visibility into upcoming sourcing activities for better financial outcomes.

  • Strategic Supplier Partnerships: Collaborative supplier relationships.
  • Process Optimization: Streamlining operational workflows.
  • Technology Integration: Leveraging digital solutions for efficiency.

SAVINGS FROM SUPPLY CHAIN INITIATIVES

Maximizing Corporate Financial Impact

Cost Reduction

Implementing strategies to minimize expenses and increase profitability through efficient operations.

Process Optimization

Streamlining workflows to enhance productivity and achieve operational excellence across departments.

Risk Mitigation

Identifying and addressing potential threats to ensure business continuity and resilience.

Supplier Management:

Establishing strong partnerships to optimize supply chain performance and foster collaboration.

Data Analytics

Leveraging insights to make informed decisions and drive continuous improvement initiatives.

Innovation

Embracing new technologies and methodologies to drive growth and stay ahead in the market.

Negotiated SavingRealized Saving

Definition

  • Savings on a new or existing deal or contract that was driven by the Procurement team in collaboration with their business partners

    • Portion of identified savings that finance confirms will have a direct impact on the budget / forecast or be used to offset expense increase else where

    Business Drivers

  • Aligned with Contract Negotiator’s goal to maximize value of each contract for their business partners
  • Aligned with business goal of expense reduction.

  • In Scope

  • Negotiated savings from “baseline” (defined below) for new or existing contracts
  • Rate Reductions
  • Savings from a proposed increase
  • Innovative recommendation resulting
    		•
  • Savings that has a direct impact on the budget or forecast or used to fund spending in other areas
  • Must be tracked (cost center impacted, effort accelerated, etc.)

    • Out Scope

    • Favorable outcomes (example: additional work added to the contract for the same cost)
    • These will be captured separately for reporting purposes
    • Business unit driven scope or volume
  • Any identified savings that does not meet the above criteria
  • Favorable outcomes and business unit scope or volume changes

    • Measurement 

  • Contract of 1 year or less:
  • Savings over the 12 months following contract signing
  • Contract of more than 1 year :
  • Savings over the 12 months following contract signing + NPV of Out Year Savings (5% Discount Rate)
  • Savings confirmed by Finance through performing budget analysis (operating or capital) and analysis of impact to the Income Statement.

    • High Level Process

  • Establish Baseline: starting point for negotiation as agreed upon by the business partner
  • Upon Contract Signature, calculate difference between final price and baseline using the method described in the above Measurement section
  • Confirm savings with Procurement Management.
  • Same as left + …
  • Submit identified savings and backup materials to Expense Management team
  • BU / CU Liaison will work with local finance teams to determine realized savings.
    •

    Enhancing Supply Chain Efficiency

    Streamlining Operations for Optimal Performance

    In today’s competitive landscape, maximizing supply chain efficiency is paramount. By implementing streamlined processes and leveraging innovative technologies, businesses can achieve optimal performance and maintain a competitive edge. Through strategic planning and continuous improvement initiatives, organizations can minimize costs, reduce lead times, and enhance overall operational effectiveness to meet evolving customer demands and market dynamics.

    Embracing technology is essential for staying ahead in the modern supply chain landscape. By integrating advanced software solutions and automation tools, businesses can drive efficiency, visibility, and agility across their operations.

    Data Analytics

    Extracting insights for informed decision-making.

    Automation

    Streamlining processes to enhance efficiency.

    Innovation

    Driving continuous improvement and competitive.

    FAQ

    OUR KNOWLEDGE

    Stay Updated With Our Consulting Services

    Stay informed about our latest consulting offerings and industry insights.

    Efficiently manage suppliers and costs to maximize value.

    Enhance competition, reduce costs, and expedite decision-making.

    Validates initiatives, ensures accountability, and drives continuous improvement.

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