I hope that you have enjoyed the article “Cost Savings Reporting: Dot The I’s.”

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An additional cost savings reporting formula with which you will want to be familiar is this:

Savings = (LYP x TYQ) – (TYP x TYQ)

Where,

LYP = Last year’s price

TYQ = This year’s quantity

TYP = This year’s price

If you explain this formula to managers in conjunction with the principles taught in the aforementioned article, they are more likely to understand how you are coming up with the metrics in your cost savings report. Let’s do an example…

LYP = $5

TYQ = 100,000

TYP = $4

Savings = ($5 x 100,000) – ($4 x 100,000)

Savings = $500,000 – $400,000

Savings = $100,000

I hope that the article and this blog post helps you develop more believable cost savings reporting procedures. Good luck!

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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