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Old 04-27-2012, 12:49 PM
000000158360
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Default Rules to calculate savings

I need help.. Please can I see some examples of your department's rules to calculate savings...

thank you so much...
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Old 05-15-2012, 01:50 PM
SGaddis
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Originally Posted by 000000158360 View Post
I need help.. Please can I see some examples of your department's rules to calculate savings...

thank you so much...
It depends on what you are looking for. We do not have an actual set process.

I make sure to only list savings that I can document. Say I have a quote for 1000 each and I counter the vendor to 950 each. I would save both of those and report the 50 dollar savings. We also document savings offered. IF You offer an end user savings and they choose to not take it(due to a preferred vendor) I will claim the savings as Lost savings.

You can also get into cost avoidance, which is a lot harder to prove. I think we need a little more information of what your end goal is to help more.

Sean
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Old 06-12-2012, 12:40 PM
martin556310
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Default Measuring cost savings

In addition to the contacted price, there can be several factors which effect the "landed cost". These may include supplier location, logistics, duty rates, transportation, payment terms, inventory programs, quality, warranty, etc. It is important these are understood and factored into savings.

That being said, when measuring pure cost reduction it is importation that you measure actual saving which hits the P&L. I have always felt that measuring over the dock, YOY savings is the best measurement. Parts/service items are “base-lined” at the prior year’s average "actual price" paid. The current years receipt price is compared to last year’s price giving a year over year (YOY) comparison. Savings is recognized upon dock receipt and matching of AP. This is what will hit the P&L.

Avoid things like projected yet unrealized, cost avoidance, negotiated savings, etc. Stick to the real P&L results.
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