Purchase Price Variance Cost Savings

Purchase Price Variance Cost Savings

Elite Procurement & Logistics Solutions has helped many of our customers to achieve purchase price variance (PPV) cost savings. PPV is the difference between the standard or budgeted price of an item minus the actual cost and multiplied by the quantity ordered. For example, if you ordered parts for $0.70 each last year but are now paying $0.60 each, the PPV has improved. While ten cents may not seem like much on the surface, when you multiply that times hundreds, thousands, or hundreds of thousands parts, you can see just how important purchase price variance can be to your profit improvement plan.

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We have several strategies for maximizing PPV including:

Last Time Buys - Last Time Buys are challenging and risky. On the one hand, you want to take advantage of an OEM’s Last Time Buy based on your future production demands and reducing costly redesigns. The key is to manage production with the best information on Change Product Notifications to proactively identify semiconductors, passives, and electromechanical components at risk and have insight into lifecycle statuses, multisourcing, and available inventory. With an LTB Agreement with Elite Procurement & Logistics Solutions will manage your material at risk and ultimately become your new supplier for these now-obsolete OEM parts. Working with Elite Procurement & Logistics Solutions gives you access to the parts you need while effectively managing the capital expense.

Life-Time Buys - Manufacturers often provide opportunities to make a one-time purchase of all the expected parts you need before they discontinue production of them. Life-time buys are similar to Last Time Buys and are an important part of any obsolescence management strategy. Elite Procurement & Logistics Solutions takes the risk out of LifeTime Buys, enabling you to order obsolete parts on demand rather than all at once.

Blanket Order Management -— Elite Procurement & Logistics Solutions offers blanket purchase order contracts options on at risk materials and electronic components using blanket purchase orders. Our blanket order management solutions allow you to procure obsolete material at a set price on a recurring basis. Not only can you rest easy knowing that you have a reliable source of at-risk parts with minimal lead times, you also have price certainty for the time period covered by the blanket order.

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