Achieving Cost Savings in the 3rd Year of Covid

2023 started off with Covid once again impacting the daily routines of many.  Time will tell how badly manufacturing and logistics will continue to be affected and how much of a delay this will add to supply chain recovery.    

Purchasing organizations have been consumed by the urgent demands of ensuring supply to keep factories running.  For most, strategic cost savings has been deferred along with everything else that doesn’t get “hair on fire” attention.   

Despite the challenges, some purchasing organizations are keeping their savings pipelines full.  Manufacturing executives have shared their successes in APD roundtable discussions.  The focus of these roundtables is peer education/sharing with participants connecting with other Purchasing, Finance, and Operations executives to share best practices.    

Here are some of the savings programs executives identified in the discussions:    

  • CEO of an automotive display supplier shared that they are working to consolidate resin materials across their North American and European facilities to achieve lower costs through increased volumes.  
  • Chief Procurement Officer at a global industrial technology company shared that their team has launched several immediate savings projects as part of APD’s Cost Management Certification course that buyers are attending.  Immediate savings will total over $1.4M, with other longer-term projects launching in parallel.   
  • Procurement Director for a household products manufacturer shared that they have focused on Value Engineering audits with suppliers to identify cost savings.    
  • Director of Strategic Sourcing for a plastic parts manufacturer shared that their sourcing team is involved at the beginning of new product development to ensure that competitively priced resins are specified.  
  • Vice President of Global Supply Chain from a manufacturer of heat transfer products shared that they are in the midst of a near-shoring initiative, focusing on Mexico for North America and Eastern European countries for Europe.  Their expectation is to drive down total cost of ownership through reduced freight and tariffs, without much expectation for reducing direct material costs.    
  • Commodity Purchasing Director for an automotive interiors supplier shared that new business awards have been the best lever for achieving cost savings in this environment.  In addition, they have had success switching plastic component top lower cost suppliers without having to share the savings with their customers.  
  • Purchasing Director for an automotive supplier of HVAC and fluid handling systems shared that they are currently evaluating potential savings from consolidating management of freight and logistics, which is currently managed independently at plants.  

To learn more about how companies are reversing economic price increases the last 3 years, CLICK HERE to access APD’s Blog on the topic. 

Attendees of APD’s Strategic Negotiation Program are learning impactful skills on how to negotiate strategically and effectively in times of economic price increases.  To learn more about APD’s Strategic Negotiation Program, CLICK HERE. 

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