Procurement Cost Optimization

Cost optimization is the central activity of the procurement function. Inflation rates are currently returning to pre-crisis levels and lower demand is making suppliers more willing to negotiate. Buyers should use this opportunity to reduce the still high cost level.

Read Magazine “Cost Reduction in Procurement”

 

 

Exploiting potential through cost optimization

Procurement has become more complex in recent years. The familiar matrix of price, quality and availability has been expanded to include the dimensions of sustainability and capital commitment. Inflation is increasing the pressure to tap cost optimization potential in all dimensions.

Now that the massive price increases are subsiding and demand is weakening, it is important to integrate the new dimensions into purchasing and focus on cost management. Despite lower raw material and energy prices, purchasing prices have so far remained at a high level. This is where purchasing should start and use the scope for negotiation to reduce high costs and remain competitive.

Digital solutions already provide support in many areas today, but they require an intelligent strategy and control in order to unleash real benefits.

Buyers need clear goals derived from the overall strategy in order to meet the diverse requirements in the best possible way.

With over 20 years of experience, our experts can advise you on identifying potential for cost stabilization and offer you full support in implementing measures to avert price risks and optimize procurement costs.

 

PROCUREMENT: LET’S GET REAL!

The INVERTO VALUE PROTECTOR

 

 

Demand & Budget Management: How to avoid unnecessary costs

As part of our potential analysis, we segment and analyze the costs for all procurement goods, purchased products and services by commodity group. We consider both direct and indirect requirements and take into account the current procurement and market situation.

With our benchmarking approach, we have the appropriate strategy to deliver best-in-class solutions in your industry for your entire procurement organisation or for selected resources. In doing so, we do not work with across-the-board cuts, but examine within the framework of demand management what your expenditure structures are like and where there is a need for cost optimization. As a result, you receive concrete information from us on which cost savings can be realised.

Effective procurement creates value for every company

After the analysis phase, we work hand in hand with your procurement staff to analyse the identified potential. To do this, for example, we sound out the procurement markets again and enter into negotiations with your suppliers or qualify new suppliers if necessary. Especially in today’s world, where remote working from the home office has become indispensable, online auctions are a valuable means of acquiring new suppliers and creating new competition among established suppliers. We would be happy to develop suitable concepts with your employees and implement online auctions.

Cost optimzations can be achieved relatively quickly in many areas – within a few months. They increase the profitability of your company and have a direct positive impact on the margin. In addition, the freed-up funds are available for investments and thus pave the way for innovations and higher value creation. The goal of our projects is always to build your team into real partners in value creation. To this end, we also offer individually tailored further training in procurement.

Inflation in Procurement

Procurement teams with the knowledge of all of its cost drivers will find that not every increase is justified. This makes it possible to fend off price increases and look to adapt commercial models to ensure fairness for both sides. – Sushank Agarwal, Managing Director INVERTO – BCG Company

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Our cost optimization insights

White Paper

Indirect Spend White Paper 2021: challenges, underrated potentials, and opportunities

Specialized Articles

Avoid inadequate conditions for complex supplier products with Should Costing.

INVERTO Magazines

Negotiations take place everywhere in business, most of all in procurement, for example in awarding contracts and annual meetings. Nevertheless, many procurement departments do not succeed in exploiting the full potential of these negotiations.

Our cost optimization expert

Mohamad Kaivan

Managing Director

contact@inverto.com Contact

Katharina Erfort

Principal

katharina.erfort@inverto.com Contact