Case Study: Purchase Price Variance (PPV)

Smith & Associates reduces build costs for an international EMS company

cost savingChallenge: An international EMS company set out to reduce its build costs for several consumer electronics projects. To reduce the cost of certain parts, the company sought alternative sources and began researching cost-savings opportunities available on the open market.

Solution: The EMS company sent its demand list to Smith & Associates to review. It chose Smith because of its experience and expertise in open market sourcing and its established relationship with Smith.  This company had a long history with Smith for shortage sourcing, and it hoped for similar success working with Smith to identify cost cutting opportunities in the open market. One of Smith’s PPV specialists promptly uploaded the list to Smith’s internal PartMatch tool where the part numbers, required quantities and target prices were matched with immediately available product. The resulting PPV list was forwarded to the EMS company within hours. The cost-savings offered by Smith were significant. Purchases made from Smith saved the EMS company as much as 50 percent on key commodities for its builds.

Benefit: Smith’s wide access to immediately available parts and comprehensive system for part matching allowed this EMS company to achieve a lower overall build cost and favourable purchase price variance on its higher cost and higher volume part requirements.  Smith continues to work with this EMS company and receives new demand lists from them frequently.

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