?Reduce (All) Spend?

February 23rd, 2012

Today?s post is by David Wenig; Manager ? Customer Services at SafeSourcing.

Maximizing potential savings requires that all spend be considered as part of your strategic sourcing initiative. While you may think that some of your categories are too small to qualify for inclusion, I would like to point out that these categories can and SHOULD be included.

Combining individual items with lower spend totals is a great way to both maximize savings potential and streamline your purchasing. If you would like to be able to consider more of your spend for inclusion in your strategic sourcing initiatives, your first step should be to talk to your sourcing partner.

You might find that you are looking broadly at a category and that many of the items you purchase are in smaller quantities or otherwise represent a small amount of spend annually. While these opportunities are often overlooked or passed over in favor of higher spend opportunities, an effective purchasing leader understands that every opportunity must be considered to truly maximize savings. In these cases, historical RFx data can be used to recommend similar or overlapping purchase items that might not have initially been considered. It may be that this data forces you to look beyond the typical restraints of accounting categorization, department or even vendor.

Once you have taken the step to find these similar items, you will see your average savings increase as vendors are given an opportunity to compete for larger volumes of new business.

Additionally, combining these items may also have the effect of streamlining your purchasing. As you have now offered more items to vendors in one RFx event, you may find that it is more favorable to award the purchases to fewer vendors. The ripple effect of efficiency will continue throughout your organization.

We look forward to and appreciate your comments.

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