Skip to content
502-805-0975Email Us

FAQs

News + Blog

Alliance Cost Containment – Lower Costs. Higher Profits.
The industry leader in cost reduction. Expense reduction services and revenue recovery for reinvestment on behalf of large companies and private equity firms..
Alliance Cost Containment – Lower Costs. Higher Profits.Alliance Cost Containment – Lower Costs. Higher Profits.
  • Company
    • Leadership
    • Our Process
    • ACC’s Core Values
    • Awards + Recognitions
    • Careers at ACC
    • Blog
  • Categories
    • View Expense Areas
    • Order PPE
  • Private Equity
    • PE Blueprint Analysis
  • Industries
    • Case Studies
    • Sample Savings
  • Dashboard
    • Help Desk
  • Contact
    • Referral Partner Inquiries
    • Supplier Inquiries
  • Company
    • Leadership
    • Our Process
    • ACC’s Core Values
    • Awards + Recognitions
    • Careers at ACC
    • Blog
  • Categories
    • View Expense Areas
    • Order PPE
  • Private Equity
    • PE Blueprint Analysis
  • Industries
    • Case Studies
    • Sample Savings
  • Dashboard
    • Help Desk
  • Contact
    • Referral Partner Inquiries
    • Supplier Inquiries

Contract Term Awareness: Volume Discounts

Are you optimizing your contracts for volume discounts?

Despite the economic downturn caused by COVID-19, supply chain teams have an opportunity to assess supplier risks and reduce costs for their businesses.

Signing a Contract to reduce expense costs

Provider contracts often contain volume clauses that directly impact the price paid for goods and services.

Examples of clause language may include:

  • “Tiered pricing levels”
  • “Single purchase order discounts”
  • “Rebates and credits”

Be vigilant. Watch for ramifications related to these discount structures. Doing so will minimize risk and optimize your volume-based pricing when inevitably your…

1. Purchasing volume decreases

Slowed business activity caused by COVID-19 could cause the cost of your purchased goods and services to automatically increase due to lower volumes, putting further strain on margins and EBITDA.

2. Purchasing volume increases

Due to an unexpected spike in new business, higher purchasing volumes should trigger a reduction in the purchase price and improve margins.

3. Purchasing volume remains consistent

Despite no material difference in your purchasing volume and unchanged pricing, it is prudent to contact your suppliers to ask about potential volume discounts through aggregated purchasing or if certain thresholds are met.

Volume storage containers in cost reduction

Our Best Advice:

Maintain full contract term awareness!
Easy to say, difficult to execute. Many companies are not aware of — or adequately tracking — procurement cost contract terms which often increase (or decrease) automatically.
All too often, supplier contracts are signed and filed away without another thought.

More vital than ever is proactive vendor communication

If your pricing is set to go up due to lower purchasing volumes, try to re-negotiate terms before the increases go into effect.
Conversely, if material pricing is going to improve due to increased volumes, make sure the supplier knows you expect those cutbacks to be passed on.

Timing is key

Contact vendors to eliminate auto renews and negotiate new improved terms.
Reasonable suppliers understand this pandemic is something totally out of your control, and most will try to work with you.

If you need assistance negotiating volume discounts, contact us for professional assistance. We are offering a complimentary roadmap to aid in profit recovery. Our model is performance-based, so no savings found, no cost to you.

Tell me more
I'd like a quote

Let us know if we can help

Alliance Cost Containment is actively monitoring indirect supply chain issues across 30+ expense categories to provide insights into how these issues may impact your business which you can view below.

 

Our team stands ready to assist with procurement challenges you’re facing. Please contact  info@alliancecost.com if you have any questions or would like input on indirect expense matters.
Share this post
Share on LinkedInShare on LinkedIn Share on FacebookShare on Facebook TweetShare on Twitter

Post navigation

PreviousPrevious post:COVID-19 Mitigation Services to Keep Your Business Clean and SafeNextNext post:Current Procurement Cost Impacts for Non-Core Expenses

Related posts

2021 electricity & natural gas rate increases - Featured Image
How 2021 utility markets will affect your business
January 15, 2021
Trucks in a wreck show Tips to Reduce Insurance Costs Across a PE Portfolio
How to reduce your PE portfolio’s commercial insurance costs
November 24, 2020
How Jars led to reduced Manufacturing costs
How Broken Pickle Jars Fix Missing Profits…
October 20, 2020
Telecom Expense Reduction for PE Firms and Large Companies
How a Large Healthcare Company Reduced Telecom Expenses
September 30, 2020
Q4 2020 Procurement Category Cost Impacts
Q4 2020 – Procurement Cost Impacts for Non-Core Expenses
September 10, 2020
Reduce shipping costs for companies
How to Combat Rising Shipping Costs
August 31, 2020
Alliance Cost Containment – Lower Costs. Higher Profits.

Copyright © Alliance Cost Containment, LLC. All rights reserved.

Legal + Privacy Notices | Contact | HTML Sitemap | XML Sitemap