Working collaboratively with your strategic suppliers can be a great way to cut costs with results that will be sustainable. It is important to ensure that suppliers know that your goal is not to unfairly decrease their profit margin, but to collectively look for ways to take cost out of the value stream. By gaining visibility to all of the relevant cost buckets for critical items, each category can be reviewed individually for opportunities. Sometimes a brainstorming session with functional experts from both organizations (who can provide insight to areas such as raw materials, equipment set-up, operations, inventory and distribution) is a great way to bring ideas to light in a process-driven format. Once ideas are identified and vetted, project managers can be assigned to move the cost cutting opportunities forward. Before embarking on this type of a task, it is important that organizations agree on how the cost reduction ideas will be "shared" or implemented.
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