ABSTRACT
Inventory savings refer to any action the supplier takes that reduces the dollar value of supplies the customer is holding. A supplier providing this kind of proof of savings creates a true competitive advantage because it helps the customer meet their cost-savings goals and proves that the supplier is truly the lowest total cost provider. As such, when manufacturers sell through distributors, savings other than price are rarely documented unless the manufacturer helps to measure the value added from better fit-to-function products. Perhaps the best-known example of manufacturers providing solid support and tools is around lighting. Suppliers who learn to measure both cost savings and revenue enhancement based on the cost-accounting principles, and who explain these to their current and the potential customers, will be able to generate more sales, maintain key accounts more effectively, and even combat margin erosion.
