Supplier Cost Improvement Template

21 Apr 2017

This is week three of ten new procurement templates in ten weeks. If you are new to this blog, be sure to check out these templates:

Week 1: sourcing strategy

Week 2: request for quotation

If you are looking for a way to increase the pipeline of cost reduction projects - a fantastic resource is to go to your key suppliers for ideas. New and existing suppliers are typically willing to share ideas. This is a great way to increase collaboration with suppliers in a positive / sharing way.

Using supplier resources for cost reduction ideas, documenting results and sharing benefits goes back to the Chrysler SCORE (Supplier Cost Reduction Effort) program. I like this quote from Bob Lutz president of Chrysler operations, in a meeting with the top 25 suppliers he said; “All I want is your brainpower, not your margins”. For more details check out these resources Innovations In Supply Chain Management a University of Michigan case study and Buyer-Supplier Collaboration A Roadmap for Success written by BCG.

The supplier cost improvement template is organized into four sections:

1. The first section is completed by the supplier. A description of the cost improvement idea is detailed. The supplier assesses the potential impacts to quality and the environment. A savings estimate is provided along with the costs to implement.
2. Procurement completes the second section. Contract implications are reviewed and the buyer identifies the source of the cost improvement idea.
3. Section three is completed by R&D/Engineering. The objective of this section is to scope the project. Key areas to evaluate are challenges, risks, success factors and capital needs. A project feasibility rating is assigned.
4. The last section recommends next steps for the project.

If your organization has 25 key suppliers and each supplier provides 10 ideas - a total of 250 projects would need review. The objective is to identify projects with a high probability of success and above average cost benefits with minimal impact to quality or growth.

Here are some screen shots of the supplier cost improvement template:

To download this template go to sourcing strategy template. You can download all the templates by going to this link.

If you have questions or comments about this template please contact me through this link: http://purchasingtoolpak.com/#contact