Author Archives: Paladin Associates
As sourcing organizations mature, it becomes more and more challenging to deliver significant savings across well-sourced categories. However, it has been Paladin Associates’ experience that there continue to be opportunities in both direct and indirect categories. Recently a client engaged Paladin to lead the sourcing process for Flexible Intermediate Bulk Containers (FIBCs). While the process was not unusual, its rigor demonstrated efficiency, effectiveness and the capability to deliver not only savings, but to provide greater understanding of and continuity of … More
Consortium Agreements and Group Purchasing Organizations (GPOs) are one of many sourcing tools that should be in every sourcing toolkit. In many cases, these types of agreements should take a much higher position in the hierarchy of tools. In fact, Consortium Agreements and GPOs often provide ‘Fortune 100′ prices and contract terms to businesses and provide built in commodity experts and contract management services. Many companies no longer have the internal resources, experience, or expertise to focus on certain categories … More
You’ve just completed a competitive bidding event with large potential savings for at least equal quality and service. Congratulations! However, to capture the savings you must move significant business from an incumbent supplier. Do the following scenarios sound familiar? Scenario 1: You approach the incumbent supplier to break the bad news. They offer to meet competing pricing if you leave the business with them. Scenario 2: You go to internal stakeholders to sell the award recommendation. They ask you to … More
Looking back fifteen or twenty years, large corporations utilized low cost country sourcing (LCCS) in order to maintain their competitive edge in their respective marketplaces. As time progressed, smaller companies followed suit. In many cases, finding/developing/investing in LCCS suppliers resulted in cost savings of 50% or more. Initially, most LCCS activity centered around the People’s Republic of China (PRC). As China’s infrastructure & labor costs increased steadily over the past ten years, India and several countries in Eastern Europe became … More
The use of e-sourcing software to interact with potential suppliers has grown dramatically in recent years. However, this same software has been under-utilized in the arena of gathering, analyzing and categorizing internal stakeholder feedback at the outset of a sourcing project. Companies can use their e-sourcing tool to gather (and house) critical internal stakeholder information via the survey portion of the tool. There are many advantages to this approach. First, using the tool sends a clear message that the company … More
• Do you have accurate information to analyze the costs of your fleet? • Can you monitor the fuel and maintenance costs of your vehicles? • Do you have well-defined fleet policies and practices? • Do you know that having “green” fleet driver behaviors reduces costs? • Do you have the most competitive lease and services rates? If not, you can follow these tips to lower costs and improve service levels in Fleet Management: – Collect fleet mileage information for cost analysis, vehicle monitoring and control … More
Travel expense management has become significantly more complicated in a global business environment. Costs are escalating and security risks for travelers must always be a consideration. Base prices for airlines, rental cars and hotels are just the tip of the iceberg. A plethora of fees makes your head spin: • Airlines: baggage fees, booking fees, seat reservation fees, change fees, fuel surcharges • Rental cars: refueling charges, insurances, additional driver fees • Lodging: resort fees, cancellation fees for Internet bookings Utilization of multiple … More
MRO is an acronym for Maintenance, Repair and Operations parts and supplies — materials and services that don’t go directly into the end product. A plant uses MRO to maintain, repair or operate the machinery and processes used in the actual manufacturing activity. U.S. manufacturers spend approximately 55 percent of total revenue to purchase goods, services and capital equipment, and approximately 20 percent of these purchases are for indirect materials or MRO. MRO spend: • Generates numerous low-dollar, unplanned buys • Includes … More
Advances in pharmaceuticals have changed healthcare treatments over the last two decades, and spending on prescription drugs is increasing faster than any other aspect of healthcare costs. The aging population and the increasing use of specialty drugs mean that this trend is likely to continue. • From 1999 to 2009, the number of prescriptions purchased in the United States increased 39% while the population grew only 9% . • Retail prescription prices have increased on average 3.6% annually between 2000 and 2009 … More
By Lora Griffith, Paladin Associates A good project manager can deliver results in any size company, in any industry, without being a subject matter expert. A client experienced $50 million of hyper-inflation from suppliers over 12 months, largely due to increased crude oil prices. • A swat team was formed to negotiate with suppliers to reduce prices but 6 months later, no prices had been reduced. • The CFO realized that there was no defined project plan or team in place to … More
by: Rob Patton It is always helpful to consider some of the pitfalls and mistakes to avoid in crafting an Indexed Price. 1. Failing to synchronize index price with your purchase price. The best way to craft an index is to approximate the feedstock component as closely as possible and use this percentage in the index. Suppliers will frequently help with this element rather than let you use an erroneous factor. Example: Corrugated linerboard is about 65% of a container … More
By Rob Patton A few essential elements will greatly facilitate your quest for the right index formula to meet your needs. 1. Am I optimizing or creating? Determine if you are creating a new index or looking to optimize an existing price index formula. If the seller’s price includes an index-based formula focus attention on understanding the formula and looking for ways to optimize and improve. If there is no index formula the first step is to gain seller agreement … More
By: Cherryl Jostad Does your company have copiers, fax machines, workgroup printers, desktop printers, and multi-function devices? Are some of these devices connected to the network, and some not? Are some leased and some owned? Do the lease terms vary? If you answered yes to one or more of these questions, you likely have a cost reduction opportunity! The cost related to copying and printing is one of the final frontiers of indirect expense reduction. While many companies have made … More
E-sourcing can deliver tremendous savings for non-profit organizations. Paladin Associates recently performed two pro bono e-Sourcing events for a charity that provides nutritious meals for the gravely ill, helping people better manage chronic disease through comprehensive nutrition and education. The organization has grown into one of the largest home-delivered meat providers in the US, serving approximately 3,500 clients and 4,500 meals each day, with estimated annual food and related product purchases of $3.9 million. This non-profit has a paid staff, … More
Businesses in virtually every industry are faced with the worst economic downturn this country has experienced in over fifty years. This downturn is causing all institutions to look at how they can reduce costs. Businesses and political subdivisions are developing and implementing plans to eliminate waste in their operations. The actions leading to this waste have been institutionalized over the years and are a part of the norm. Businesses must focus on reducing their operating costs in order to regain … More
