PurchTips - Edition # 118

 

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Picture of Charles Dominick, SPSM, SPSM2, SPSM3

Cost Savings: Tips For Recording Them

By Charles Dominick, SPSM, SPSM2, SPSM3

Are You Optimally Recording Your Cost Savings

One of the most important practices in demonstrating Purchasing's value to the organization is tracking and reporting cost savings. When you achieve cost savings, there is important data you should log, such as:

  • Date
  • Description of Product or Service
  • Baseline Price
  • Type of Baseline or Type of Savings
  • Current Price
  • Quantity
  • Cost Savings
  • Buyer
  • Supplier
  • Cost Center
  • Category or Commodity

Allow me to elaborate on some of these items...

Baseline Price. Cost savings is the difference between your current price and a higher price, called a baseline.

Type of Baseline or Type of Savings. Baselines may include last year's price, originally proposed price, cost to produce internally, etc. The baseline may determine whether management deems the impact an avoidance or cost savings and may only be interested in the latter.

Cost Savings. This field should be automatically calculated by multiplying the quantity by the difference between the baseline price and the current price.

Cost Center. Reporting your cost savings by cost center helps Purchasing demonstrate the positive impact it made on a specific department's budget.

Here are three more tips for recording cost savings:

  1. Record Price Increases, Too. Reporting "net" cost savings will better match your reports to financial statements, making your reports more believable.
  2. Use A Database Not A Spreadsheet. Databases allow you to create separate tables for certain fields and, therefore, select from lists that will ensure the integrity of the data and make it easier to aggregate.
  3. Use Actual Quantities. While estimated quantities save you the work of having to routinely update the cost savings log, estimated quantities usually vary from actual quantities, which can damage the integrity of your cost savings report if upper management scrutinizes it.

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Spotlight On Professional Development Opportunities

SPSM Certification

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills.They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Is lacking a purchasing certification keeping you from getting the results, opportunities, respect, and money that you want out of your career? Today's employers refuse to reward employees for yesterday's skills. They want you to save more money, achieve better operational performance, and reduce risk. They demand that purchasing professionals like you achieve unprecedented results and without the most modern skills that can be a challenging feat!

So how can you acquire the most modern skills, achieve meaningful results, and convincingly prove your capabilities to today's employers? There is an impressive purchasing certification program that will teach you what you need to accomplish all of this and more. It is the SPSM® Certification, earned by completing the Senior Professional in Supply Management® Program. And you could earn it in less than a year - maybe even much less than a year!

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) (with the option of getting a Study Guide on an iPad) at:

Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) at:

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices  into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, SPSMSM Certification Program on or before 4/30/2007, you also get these and other bonuses valued at over $700:

  • FREE $30 gift certificate to Amazon.com!
  • FREE CD-ROM with printer-friendly versions of the class materials!
  • FREE Purchasing Performance Measurement spreadsheet template!
  • FREE audio CD about purchasing job security!

To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:

Earning your Senior Professional in Supply Management® (SPSM) Certification is the action to takeif you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSMSM Certification at:

Learn how to earn your SPSM® Certification at:

www.NextLevelPurchasing.com/spsm.html



The Latest Purchasing News

  • Considering a career move? There are approximately 100 jobs preferring SPSM-Certified candidates posted at www.NextLevelPurchasing.com/jobs
  • Michelle Renee Hearne-Hernandez, a Purchasing & Inventory Coordinator from Sun Valley, California, was the winner of the Amazon.com gift certificate awarded to one of the participants in our recent survey. Next Level Purchasing sincerely thanks all who participated.

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Included in your free Starter Kit:

  • Access to two lessons from courses that are part of the Senior Professional in Supply Management® Program
  • A Certification & Training Planning Template
  • Case studies
  • A free Basic Membership in the NLPA

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If you are already a member of the NLPA, click here to login and visit the "Starter Kit" tab to access these resources.