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Analysis of our purchasing volume. The first step once purchasers take over a new role should be to analyze the purchasing volume that we are responsible for.

It’s important to know how much the purchasing volume is and how this volume will develop during the next years; a predicted forecast.

If we have several locations under our responsibility, we must know how much volume there is at each of the locations.

We should analyze which suppliers we have in our portfolio for this material group and how much they deliver; the share of each of them in our purchasing volume.

There should be a similar analysis if we have different components in the material group; which components we have and the share of each of them in our purchasing volume.

It is also important to understand if the sourcing by the material group is global, regional or even local to local.

A rough overview about what we need from suppliers in terms of process is necessary. Aspects like the kind of equipment needed for the production, if that equipment is market standard or specifically for us, the necessary investment and the ownership of the equipment… are all relevant to really understand the material group.

And finally, it is also interesting to check the complexity of the material group. Number of total components, yearly quantities per variant, amount of different tools or amount of variant per tools are some indicators to analyze this complexity.

As in most cases, it is recommended to apply the 80/20 rule, focusing on the first step in 80% of our purchasing volume which will mean 20% of our time and resources, and once we have this 80% under control, continue with the rest of the small issues step by step.

If you are interested in investing in an exceptional team and increasing your company’s profitability, we encourage you to consider our next training focused on improving strategic purchasing skills. Additionally, please feel free to contact us for more information.

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