How can you as a Procurement Manager achieve 10% cost reduction per m3 of your factories production?

There are multiple strategies:

1. Negotiating a price/cost reduction from your suppliers.

2. Purchasing materials at the lower end of specification at lower price

3. With engineering help having a VAVE to reduce the bulk density of your final product by adding a foaming agent 

4. With engineering help VAVE to change the mixture to increase the % of the lower cost component 

We may look into the consumption of the parts and make the agreements with the suppliers to have fixed prices all the period. And we may go thru the current prices with us and compare it with market prices in order to make stratigy of getting the best prcices all the time and save as much as we can. 

by changing the specs to be fit with your min requiement and remove all extras, re negotiate the prices, check for new suppliers, bulk buy

The Procurement Manager needs to be "creative" in achieving his goal, based on his environment; Some of the options to consider include:-

BULK BUYING - The companies which have  greater geographical presence or are multi locationalcan  achieve better price by buying bigger volumes  instead of buying for individual units. Central buying policies are recommended for such unit .Bulk buying results in  annual contracts for a period of six - twelve months for entire year requirement with prices being finalised  for the entire period .

OPPORTUNITY  BUYING-Most of the commodities  and raw material  has seasonal  cycle  of prices  as they peak and fall in intervals .Hence we can book maximum amount of our requirement  when prices are low .

LOCAL   VENDORS -Vendors should be located  in close vicinity of company which helps in keeping low inventory as well as low freight cost .

PARTNERSHIPS  WITH MAJOR VENDORS-It  is highly recommended to have partnership  with vendors  in either having equity or technical collaboration so as to pass on savings to  the  customer . Which results in  cost reduction in manufacturing cost. Most of the Automobiles Majors has this kind of arrangement  with  their  vendors .Vendors are assured of business .

E PROCUREMENT-Putting up tenders and requirement  on Internet  and setting up auction for  requirement on web  which helps in reaching out more numbers of  vendor base . This  also helps in cutting cost  when we opt for conventional  way of asking tender / quotation . Most popular  way of procurement strategy is reverse auction , where the lowest price bidder takes away the order

BUYING  MATERIAL FROM  TAX EXEMPTED AREA .-In several countries the federal/ State govts provide  tax heavens for manufactures for certain period say10-15 years .Hence buying from these area s helps in cutting cost .In common parlance it is called TAX HOLIDAYS . Look out for such places prior to placing orders.

ALTERNATE MATERIAL-Select high cost items  and replace it by  some  low cost material . eg ; steel by plastic/aluminium .

VENDOR MANAGED INVENTORY (VMI). With the appropriate incentives, allowing suppliers to assume the responsibility for replenishment of your inventory, because of their visibility into both their own inventory and production schedule and your demand data, can almost always reduce your inventory.

VENDOR STOCKING PROGRAM (VSP). Used primarily for maintenance inventories but applicable to all, VSPs require a supplier to commit to an extremely high service level for delivery of specific SKUs within a fixed time at a predefined markup. VSPs can reduce or eliminate inventories for slow- moving products