Cost Management

“It is bad to pay too much, but it is far worse to pay too little”


Procurement and Cost Management Initiatives.


COST MANAGEMENT

There are many ways organisations can reduce costs. BvW’s focus is on the reduction of overall costs that contribute to an increase in profit margin.

Costs must be understood, measured and actioned in a logical approach. Failing to do so will add value to a single department only and not address the total cost and product life cycle that extends from new product development to wastage.

Cost can be measured and decreased with various tools such as Procurement and Supply Management, Tier 3 Strategic Sourcing, Price and Cost Analysis, Supply Chain Management, Inventory Optimisation and Target Costing. These tools, when used in a harmonious manner contribute to an organisational cost elimination.

Cost drivers must be understood and linked back to all Company cost reduction initiatives in order to avoid ‘passing-on’ cost from one department to the next, hiding the true picture, and failing to dramatically change organisations way-of-work.

How we helped others

We have helped clients reduce their costs across a wide range of industries. Sample projects include:

Developed the Procurement Contracts Infrastructure for a $10 billion pharmaceutical care company.

Managed a Procurement Card Pilot Programme for a $6.3 billion physician services company with savings of $1.8 million (Pilot Programme) and $35 million (Roll Out).

Creation of a Strategic Sourcing Model for a $7 billion Fortune 500 paper / distribution company and $80 million savings.

Supply Chain Model for a $5 billion automotive company with $2.8 billion in purchasing volume. Identification of $112 million savings including 23% price variance from its supplier base.

BUSINESS CASE

Client Challenge

Reduce pricing of products and procurement time across differently owned and operated using e-business solutions which can easily connect with suppliers, resulting in increased profitability for hotels.

Approach

This hotel chain decided to pilot the Marketboomer technology in conjunction with services from BvW to better understand the process of eliminating process inefficiencies. BvW embarked on performing a spend analysis which resulted in consolidating the products being purchased between similar properties.

Using marketboomer technology, BvW was able to assist this client in demonstrating a significant saving on prices variances using an e-procurement technology.

Outcomes & Recommendations

Introduction of outsourced managed services through BvW’s Supply Management Centre (SMC).

Based on a large spend level, the SMC allows financial controllers to introduce guaranteed savings to the income statement using BvW consultative approach to Procurement Outsourcing via its SMC Managed Services.