Cost Reduction Ideas (Beyond Sourcing)<\/h1><\/div><\/div><\/div>Have You Considered Alternate Cost Reduction Ideas?<\/h2><\/div><\/div><\/div>When seeking to reduce its expenditures on goods and services, the first thought in many organizations is “Let’s find cheaper suppliers.” But in many cases, sourcing for new suppliers is either not practical or it’s a suboptimal alternative.<\/p>\n
Fortunately, there are several ideas for achieving cost reductions without switching suppliers. Rob Patton, an associate with sourcing consulting firm Paladin Associates, has identified seven such cost reduction ideas, including the following four:<\/p>\n
![\"\"](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2021\/02\/cost-reduction-ideas.jpg\")
<\/p>\n
“Ask & You May Receive”<\/b>\u00a0– “Ask your suppliers if they have cost savings ideas,” suggests Patton. “You never know when the answer may surprise you.”<\/p>\n
Aggregation<\/b>\u00a0– According to Patton, Aggregation is “any effort that makes the buyer’s requirements more attractive to the seller by bundling those requirements with the volume of other buyers. This can be internal across business units or geographies or external with other companies.” For external bundling, you can build your own consortium or join an existing group purchasing organization.<\/p>\n
Spec Rationalization\u00a0<\/b>– Spec Rationalization involves looking at the goods and services you buy and determining smarter ways to specify them. Patton shares an example from previous employment: “We discovered that we had between 80 and 100 different specifications across the company worldwide for water. No reasonable person in Purchasing or Engineering is gonna say that we really need that many specs for water.”<\/p>\n
Leveraging The Supply Chain<\/b>\u00a0– “In this technique, you’re looking at suppliers’ suppliers, one or two steps back in the supply chain,” Patton explains. Sometimes, “the biggest cost component in the equation is really out of your own immediate supplier’s direct control.” Patton recommends working to identify situations where several of your suppliers buy the same material towards what they make for you and then leveraging that combined demand to drive cost reductions from lower tier suppliers.<\/p>\n
Recommended Resource:<\/b><\/p>\n\n- Cost Savings Spreadsheet<\/a><\/li>\n<\/ul>\n
Recommended Course:<\/b><\/p>\n\n- Best Cost Reduction and Performance Management Strategies<\/a><\/li>\n<\/ul>\n
NLPA Learning<\/b><\/a><\/span>:<\/b> Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in NLPA Learning<\/span><\/a>.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>Do You Want a More Rewarding Procurement Career?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/spsm_verify.jpg\" "\\"spsm_verify\\"")
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services.jpg\" "\\"services\\"")
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
Have You Considered Alternate Cost Reduction Ideas?<\/h2><\/div><\/div><\/div>When seeking to reduce its expenditures on goods and services, the first thought in many organizations is “Let’s find cheaper suppliers.” But in many cases, sourcing for new suppliers is either not practical or it’s a suboptimal alternative.<\/p>\n
Fortunately, there are several ideas for achieving cost reductions without switching suppliers. Rob Patton, an associate with sourcing consulting firm Paladin Associates, has identified seven such cost reduction ideas, including the following four:<\/p>\n
<\/p>\n
“Ask & You May Receive”<\/b>\u00a0– “Ask your suppliers if they have cost savings ideas,” suggests Patton. “You never know when the answer may surprise you.”<\/p>\n
Aggregation<\/b>\u00a0– According to Patton, Aggregation is “any effort that makes the buyer’s requirements more attractive to the seller by bundling those requirements with the volume of other buyers. This can be internal across business units or geographies or external with other companies.” For external bundling, you can build your own consortium or join an existing group purchasing organization.<\/p>\n
Spec Rationalization\u00a0<\/b>– Spec Rationalization involves looking at the goods and services you buy and determining smarter ways to specify them. Patton shares an example from previous employment: “We discovered that we had between 80 and 100 different specifications across the company worldwide for water. No reasonable person in Purchasing or Engineering is gonna say that we really need that many specs for water.”<\/p>\n
Leveraging The Supply Chain<\/b>\u00a0– “In this technique, you’re looking at suppliers’ suppliers, one or two steps back in the supply chain,” Patton explains. Sometimes, “the biggest cost component in the equation is really out of your own immediate supplier’s direct control.” Patton recommends working to identify situations where several of your suppliers buy the same material towards what they make for you and then leveraging that combined demand to drive cost reductions from lower tier suppliers.<\/p>\n
Recommended Resource:<\/b><\/p>\n\n- Cost Savings Spreadsheet<\/a><\/li>\n<\/ul>\n
Recommended Course:<\/b><\/p>\n\n- Best Cost Reduction and Performance Management Strategies<\/a><\/li>\n<\/ul>\n
NLPA Learning<\/b><\/a><\/span>:<\/b> Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in NLPA Learning<\/span><\/a>.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>Do You Want a More Rewarding Procurement Career?<\/h5><\/div><\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div><\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
When seeking to reduce its expenditures on goods and services, the first thought in many organizations is “Let’s find cheaper suppliers.” But in many cases, sourcing for new suppliers is either not practical or it’s a suboptimal alternative.<\/p>\n
Fortunately, there are several ideas for achieving cost reductions without switching suppliers. Rob Patton, an associate with sourcing consulting firm Paladin Associates, has identified seven such cost reduction ideas, including the following four:<\/p>\n
<\/p>\n
“Ask & You May Receive”<\/b>\u00a0– “Ask your suppliers if they have cost savings ideas,” suggests Patton. “You never know when the answer may surprise you.”<\/p>\n
Aggregation<\/b>\u00a0– According to Patton, Aggregation is “any effort that makes the buyer’s requirements more attractive to the seller by bundling those requirements with the volume of other buyers. This can be internal across business units or geographies or external with other companies.” For external bundling, you can build your own consortium or join an existing group purchasing organization.<\/p>\n
Spec Rationalization\u00a0<\/b>– Spec Rationalization involves looking at the goods and services you buy and determining smarter ways to specify them. Patton shares an example from previous employment: “We discovered that we had between 80 and 100 different specifications across the company worldwide for water. No reasonable person in Purchasing or Engineering is gonna say that we really need that many specs for water.”<\/p>\n
Leveraging The Supply Chain<\/b>\u00a0– “In this technique, you’re looking at suppliers’ suppliers, one or two steps back in the supply chain,” Patton explains. Sometimes, “the biggest cost component in the equation is really out of your own immediate supplier’s direct control.” Patton recommends working to identify situations where several of your suppliers buy the same material towards what they make for you and then leveraging that combined demand to drive cost reductions from lower tier suppliers.<\/p>\n
Recommended Resource:<\/b><\/p>\n Recommended Course:<\/b><\/p>\n NLPA Learning<\/b><\/a><\/span>:<\/b> Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in NLPA Learning<\/span><\/a>.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div> Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div> Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>\n
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Do You Want a More Rewarding Procurement Career?<\/h5><\/div>
<\/span><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>
<\/span><\/div>
![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services-contracting.jpg\" "\\"services-contracting\\"")
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