Supplier Reduction Cost Savings Analysis

-Amerisource Industrial Supply’s mission is to help its customers reduce their maintenance cost by reducing supplier and product complexity.  We also have experience in house staff to assist our customers in solving their maintenance and facility supply challenges.  Finding solutions is our strength and if we don’t know we will find an answer.  Supplier reduction is not a passing fad.  It is a reality and can help your business reduce and control cost in addition to the benefits of adding a supplier partner to your business.  We are subject matter experts in Janitorial, Packaging, Safety, Office and other consumable supply lines.  Our 4 step process will help reduce your MRO supply spend.

1. Analyze current situation and Implement Best Practices
2. Install practical consumption controls and inventory management to reduce usage, storage space etc…
3. Simplify the purchasing, receiving, billing process to the least amount of effort
4. Look for resource and waste recovery

We provide consumable supplies at the lowest total cost.  There is a key statistic most companies over look and that is the soft costs associated with purchasing Industrial Supplies.  Purchasing management statistics indicate that these cost make up 60% of the cost of supplies.  Only 40% of the cost of industrial supplies is the price of the product.  Most of purchasing time is spent on bidding and price reduction.  With commodity prices on the rise this will lead to dimishing returns.  There is a limit to savings based on price reduction alone.  Companies need to look at the entire process and change the model to realize bigger savings.   It is a simple concept. The more that one supplier can do the better the leverage.  Further eliminating internal effort on non value added tasks will reap big rewards.  The old model of requisitions, PO’s to a number of different vendors is out dated.  The most cost effective supply arrangement is;

1. Allow the vendor determine what you need
2. Have the fewest vendors possible
   1. Fewer shipments
   2. Fewer invoices
   3. less Management
3. No requisitions or purchase orders
4. One monthly bill divided by cost center
5. Financial controls and incentives to manage costs

Supplier Reduction Cost Savings Estimate

 Number of Maintenance & Facility Suppliers                             _____________

Annual or Monthly Maintenance Purchases                                 _____________

Cost of Purchasing 20-30% of Purchases

 (PO, Ordering, Receiving, Admin)                X 20-30%              _____________

Inbound Freight UPS, RPS, Common Carrier         +                   _____________

Total Cost of Purchasing from Current Suppliers                        _____________

 Estimated Supplier Reduction Percentage               X                 _____________

Estimated Savings from Consolidating                                            __ ___________

Product & Complexity Reduction Cost Savings Estimate

 Number of Maintenance & Facility Products                              _____________

Annual of Monthly Maintenance Purchases                                _____________

Cost of Product Complexity 5-10%

          (pilferage, spoilage, misuse, overuse)            X 5-10%      _____________

 Inventory of Maintenance Items                                                     _____________

Inventory Holding Costs 5%                                  X 5%                   _____________

 Estimated Product Reduction Percentage                                   _____________

Estimated Savings From Reduction                                                _____________

Estimated Savings Holding Costs                                                      _____________

Total Savings Product Simplification                                              _____________

 Grand Total Savings Potential                                                             __________

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