Procurement savings

Percent of procurement savings over-/ under-delivered against Initial target... 

Two basic procurement functions exist for resale or purchasing for consumption or conversion (Dobler et al. 1977, p. 4). Procurement is a core function of the business (Dobler et al. 1977, p. 5). Key objectives in procurement are to procure specified objects at a defined quality from suppliers, achieve cost savings and minimum prices for these objects and ensure continuous supply and foster joined innovations with suppliers based on contracts and a supplier relationship management. 

The existing Sydney and Melbourne plants were well out of phase with market requirements in their respective states, requiring additional transport costs to move product to the market. However, the market requirements for NSW and Victoria/ South Australia/Tasmania are sufficiently close that identical sized plants could be built, with significant cost savings in engineering and procurement compared with construction of two plants of differing capacity. The Melbourne and Sydney chlor-alkali plants are therefore identical up to the point of manufacture of compressed, dry chlorine. Even the plant layout has been kept identical. 

Has construction experts working with the engineering and procurement process that results in construction safety, cost, schedule, and quality savings... 

An observable advantage of purchasing excipients from a pharmaceutical excipient distributor is the ability of that distributor to consolidate the purchase of many excipients on behalf of the user. By this rationale, the distributor becomes an extension of the excipient user s sourcing and procurement departments. This presents obvious time-, resource-, and cost-saving opportunities to the user, because they can allocate their resources to other functions, while the distributor assembles all necessary documentation and executes all orders with the various excipient makers. 

Bulk and pooled procurement mechanisms can reduce drug prices substantially. The pooled procurement practices of the ECDS reduced unit costs for pharmaceuticals more than 50 per cent during its first procurement cycle (Huff-Rouselle and Burnett 1996). Also, the Delhi model used a pooled procurement system for hospitals and health facilities, through a CPA, saving nearly 30 per cent of annual drugs cost for the government and improving availability more than 80 per cent (Chaudhury et al. 2005). 

Other than saving procurement time for long-lead-time items, it is not often cost-effective to purchase used equipment. The fundamental reason is that the major part of the cost of a project is the installation cost. Also, one is never sure about the actual condition of used process equipment. 

Since a container under internal pressure represents a risk for health and safety, extensive government regulations set minimum standards for the save construction of a pressure vessel. These safety regulations not only focus on the design, they intend to procure a throughout quality approach for the fabrication of the vessel. 

Realized savings potential of procurement as percentage of total spend... 

Herein lies the key to why excellence in procurement is such an important indicator of a healthy merger. In order to achieve significant savings from product changes or optimized processes, in-depth cross-company and cross-functional involvement is necessary. The two old cultures thus start working together on creating new value and indirectly also a new culture. 

Fig.n.3 I mpact of procurement on company performance Assuming 10% savings on costs/assets in model calculation (1994-1999) Source McKinsey... 

To capture the business opportunities, the procurement team then needs to build a holistic business plan. The business plan mentality is critical, since it will provide the organization with a clear proposal and basis for the decision to allocate necessary resources to the planned efforts. Organizations that have pursued such an approach have created the prerequisites for performance transparency and service-oriented behavior. Possible outcomes depending on the needs of the company and the capabilities developed within procurement can range from a strong procurement network with its own profit and loss statement and balanced scorecard to the creation of a market-oriented profit center unit. The business plan should be focused primarily on value creation rather than cost savings, and should consist of two distinct parts ... 

Key performance indicators (KPI) Do the savings also lead to improvements in other performance indicators (e.g., inventory costs, product quality, etc.) Which are indicators of behavioral change / c 2-3 indicators per team Value scorecards (suppliers, procurement)... 

Proper planning of inspections should save time and resources (e.g. financial and human) through procurement agency planning. 

When more information is available as to the over-all number of the Army-type mask, which can be procured as excess property, we shall be able to foresee the actual needs for production of the CDV-800 organizational mask. The civilian-type mask may be adequate for use in the lighter civil defense organization-type work. If so, large sums of money can be saved by their use. 

The bottom line is, do not be shortsighted when pmchas-ing your conveyor dryer. The choices made at the procurement stage will affect you for years to come. A small saving at the procurement stage may result in large losses over the life of the dryer. 

Special problems of design and procurement arose next in the field of reactor control instruments. It was first decided that pilot models of these instruments and associated circuitry would be supplied by ORNL. However, early in 1950, in the interest of saving time, ORNL agreed. to supply the full complement of special reactor-control instruments and associated circuits (see Controls, Chap. 5). 

---