The goal of both is traditionally to get the best price. Because the objectives are opposite, in practice it means sometimes long and unnecessary RFQ rounds, depending on the objectives of the companies.
Our goal is to remove barriers to trade by increasing the competitiveness of companies through transparency and to direct the use of sourcing and sales resources to the right things. That’s why we’ve developed a tool that allows manufacturing, design, and buying companies to agree on prices with fact-based cost information more efficiently and faster than just trying to find out their existing price levels. Additionally, price changes are easier to be agreed.
I have heard a few times that our suppliers do the calculations for us, or we do not have time for that, because at the moment of our time is spent in avoiding the price increases. Or we don’t really know where the costs come from. Yes, you read correctly… Lack of competence and / or time are typical problems in procurement organizations.
But wait, how long does it actually take to do one cost calculation? With our app actually only takes two to five minutes, meaning that you can easily make 100-200 of them within one working day. For example, if a company has about 1,000 purchase parts, they can all be analyzed in one to two weeks. Thanks to our preset parameters, our application will speed up the calculation even further and at the same time act as a guiding and educational tool.
No additional resources are needed if the organization’s focus will be set again. By reorganizing and increasing competence, procurement work can in some cases be managed even with a smaller headcount. The freed resources can also be directed to more productive work. The same applies also to the selling party.
An example of the savings.
- Company’s annual purchase budget two million euros
- Direct savings 20% = EUR 0.4 million
- Fact-based cost analysis typically saves 20-50% on direct purchasing costs
- Personnel costs
- Salary of one white-collar employee, including social costs EUR 50 thousand
- In both procurement and product development organizations, resources are tied in maintaining company’s competitiveness. Likewise, resources are tied from the selling party to acquire new customers and make “blind offers”.
- Depending on the size of the company, the personnel cost savings from streamlining operations are significant
- Investments and product decisions
- The product development process speeds up and the payback time of company’s investments decreases and product decision-making becomes clearer
- Compared to these savings, including personnel costs alone, the license cost of the app is only a fraction
19.5.2021 | Vesa Eskelinen
