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Showing Value (Part IV)

By Robert A. Rudzki, SCMR Contributing Blogger
January 23, 2012 - SCMR Editorial

One of the important design choices in building a credible cost reduction tracking system is what should we measure our cost reductions against. There are some basic choices:

• Costs of a baseline year (e.g. the year just before your efforts began)
• Prior year costs (so-called “year-over-year reporting”)
• Business plan (budget) for the current year
• Market

In the most advanced organizations, capabilities exist to do all of the above. What’s right for you will depend mainly on your company’s financial office, and your internal clients.

Another very useful technique is to track progress on individual projects from the initial “identified opportunity” through “on the table” (initial offers), to “final negotiated” results, to “realized benefits.”



About the Author

image
Robert A. Rudzki
SCMR Contributing Blogger
Robert A. Rudzki is a former Fortune 500 Senior Vice President & Chief Procurement Officer, who is now President of Greybeard Advisors LLC, a leading provider of advisory services for procurement transformation, strategic sourcing, and supply chain management. Bob is also the author of several leading business books including the supply management best-seller "Straight to the Bottom Line®", its just-released sequel "Next Level Supply Management Excellence," and the leadership book "Beat the Odds: Avoid Corporate Death & Build a Resilient Enterprise." You can reach him directly at: .(JavaScript must be enabled to view this email address).

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