Are you also one of those purchasers who must save 5% a year?

Are you also one of those purchasers who must save 5% a year?

In many companies, there is a requirement that savings and optimisations must be achieved annually. This often means that the purchasing department has to lay down requirements for savings with their subcontractors. But savings can be achieved in many ways, and at RIVAL there is a clear approach to this.

“In many ways it’s about not thinking completely conventionally in relation to purchasing and savings,” says RIVAL’s Henrik Holvad. “Our experience over several years is that the customers who are in control of their business and who look at the total costs, also end up getting the best prices – and in that way, it can become a good business both for the customer and the supplier.”

Valid forecasts
The potential for good prices often starts with the customer having valid forecasts for the future production of their components. “It will seldom become a good business for the customer if they start by ordering 200 components, and then repeat the process several times, perhaps over a year,” says Henrik Holvad. “It’s all about knowing beforehand, for example, that 1000 components a year will be used and then entering into a framework agreement to manufacture them with us. It gives us completely different options for manufacturing, when we have plenty of time and can put components in storage, so we can deliver when the customer requires them and at the same time, offer a better price.”

Optimisation of product and production
RIVAL often enters into an optimising process on the actual machining, when it applies to the customer’s components, which can also have a significant impact on the final price. “When our customers enter into a long-term agreement with us, it also makes good sense, and it’s very profitable if we look at how we can optimise the machining process and perhaps optimise the customer’s specifications relating to machining, tolerances and materials,” says Henrik Holvad.

“It happens often in a collaboration where the customer can see the benefits in investing in a start-up project in order to subsequently get more attractive prices on the finished products.”

Significant savings
“Today, many of our customers can for instance see the benefits in entering into framework agreements, where in addition to getting the full RIVAL package with among other things, documentation, measurement reports, quality, reliability of delivery and professionalism, they also achieve overall financial savings up to 20%. But it requires that our partners in “purchasing” at the customer’s location are ready to look beyond the conventional purchasing strategy, where it’s about the price and the product.

You have to see things in a bigger perspective, and the total overall savings must be factored in. This is where the customers can achieve the required savings without having to compromise in areas like quality and reliability of delivery, which are often crucial for the people who will finally use the components.”

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