Trends Survey > avoidances and savings and the inflationary market

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    • #292559

      A SIG Buy-side Member requests your input on recent trends, specifically operating in an inflationary market. 

      Sourcing and procurement practitioners are now recognizing shifts in cost avoidances vs. cost savings. A pattern seems to emerge, where cost avoidance as a methodology is rising while hard savings are decreasing.

      We can assume that avoidances are rising as we spend much time negotiating cost increases, which may have been built into contracts but had not yet been invoked by the supplier. In comparison, hard savings are more difficult to obtain as market competition is fading and costs are rising. 

      This Member is asking: 

      1 – Are you seeing this same pattern in your methodology and approach (cost avoidance efforts increasing but hard dollar savings decreasing). Or, on the other hand, are cost avoidance efforts increasing, yet yielding less than expected success, while efforts targeting savings opportunities remain steady, and are yielding better than expected results?

      2 – What factors are contributing to the shift?

      3 – What actions have you been taking when a supplier invokes the cost increases?

    • #295748

      1. Raw Material Surcharge is agreed which is giving us advantage on raw material pricing is donw

      oOn Cost down there is no major request at present as there is huge pressure on inflation , volume decreases it is more to make supplies sustain rather ask for cost down

    • #295751
      Anonymous
      Guest

      1. We don’t see that trend as we added an additional component to hard savings related to demand reduction and stopping discretionary spend. This is related to right sizing services we use and challenging spend which is not linked to priorities or operations.

      3. Cost increases are indeed more frequent than in the past. Having benchmark data to push back to increases can help, right sizing (eliminate any licensing which is not used/ not needed),asking the vendors for usage data and eliminate low/ light users.

       

    • #295753

      1.  Not really a trend, more our standard business practice that we always expect both.

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