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as i understand saving is not the value in term of money which we directly save from our negotiations but also includes adding some value & Cost Avoidance.
In modern procurement, saving means achieving the Best Value for Money. Best Value for Money is defined as the “Optimization of whole-life costs and quality needed to meet the user’s requirements, while taking into consideration potential risk factors and resources available”. In order to determine Best Value for Money, the following factors need to be taken into consideration:
(a) Cost-related factors: The entirety of the cost components that comprise the total cost of ownership of the acquired good, service or works, whether direct or indirect, fixed or variable (e.g., price; ancillary support, such as maintenance, upgrade and storage; supplies and additional operating costs; disposal costs; volume discounts; and internal processing costs to support the transaction).
(b) Non-cost-related factors: Factors or attributes that are related to the Organization’s needs and requirements (e.g., technical merits of the offered goods, services or works; compliance with specifications and requirements; quality; timeliness of delivery; competency, reliability and financial capacity of the prospective supplier; and compliance with contractual terms and conditions).
(c) Market environment: Overall market maturity and availability of sources.
(d) Competitive, fair and transparent sourcing process.
(e) Risk factors: Any risk that may jeopardize the successful outcome of a procurement (e.g., financial viability and capacity of the supplier; legal exposure and liability; geo-political circumstances; price stability; and dependency).
Dear sir ,
Saving means ,reducing costs from supply chain , time to market ,.customer satisafation ,stay in competitive market ,
