Supplier Management

How Open Book Calculation May Help Lower Your Costs

Have you ever perused the books of your suppliers? It may be worthwhile where complex products and/or high supply volumes are concerned. Objective: The supplier discloses its calculation; jointly with you as the customer, cost reduction potentials are raised. This will provide you with a price advantage – and, via lower costs, the supplier is able to keep yields stable.

Will your suppliers go along with the so-called open book calculation? No, many will reject it. However, if you are anyway in the process of selecting a new supplier, this procedure might be the way for you to take. Because for a new customer, suppliers are usually much more willing to accept this requirement: The new business prospect is tempting!

This is how you can develop cost advantages jointly with your supplier:

1. Show your supplier the benefits of this practice for both sides.
2. Review the processes at the supplier's within the scope of an audit.
3. Bring in your company's know-how to a) initiate process simplifications, b) develop more cost-efficient options for the supplier's procurement, and c) think about how you can raise cost advantages for the supplier by making small changes in the specifications of your products.

Expert on the topic: Matthias Hedergott, Kerkhoff Consulting; phone: 0211/621 806 133; e-mail: m.hedergott@kerkhoff-consulting.com