HARD SAVINGS:
|
Commercial
|
Measure
|
Determination/Confirmation
|
|
Non-Market Price |
Non-market price reduction from prior year end price |
Supplier tally confirmed by buyer and SBU accounting and credited to supplier for next 12 months |
|
Payment Terms |
Incremental improvement in pay terms |
Differential calculated between old terms vs. new terms One time annual cash flow savings based on PPG's cost of funds |
|
Rebates / Prebates |
Improved rebate/prebate over prior year lowers actual net price |
Supplier rebate/prebate or incremental rebate/prebate confirmed by buyer and SBU accounting and credited to supplier for applicable period |
|
Supplier financing |
Actual $ paid by Supplier to SBU for project cost |
SBU accounting receives/credits $ |
Operational Process
Improvements
|
|
Determination/Confirmation
|
|
Outsource |
Innovative service or joint effort to replace PPG internal effort |
Internal vs. external cost comparison evaluated by purchasing/SBU accounting/applicable functional area |
Lower energy
consumed
(Energy Efficiency) |
Less energy consumed due to Supplier’s proposed change |
Plant operations, SBU accounting verifies lower energy bills paid. (cost savings for the 1st full year only) |
|
Yield Improvement |
Improved throughput, waste minimized in production process |
Plant operations, SBU accounting verifies improvement in output or sub-standard product loss. (cost savings for the 1st full year only) |
Inventory
|
Measure
|
Determination/Confirmation
|
|
Material consolidation |
Actual working capital removed from ledger |
Buyer, plant operations, SBU accounting verifies. 12% annual cost multiply by on hand inventory eliminated. (cost savings for the 1st full year only). |
|
Vendor Owned Inventory |
Actual working capital removed from ledger |
Buyer, plant operations, SBU accounting verifies. 12% annual cost multiply by on hand inventory eliminated. (cost savings for the 1st full year only) |
|
Vendor Inventory Mgmnt |
Elimination of planning for material, order placement, etc. |
Plant operations, SBU accounting verifies employee's work time allocated elsewhere. (cost savings for the1st full year only) |
Quality/Innovation
|
Measure
|
Determination/Confirmation
|
|
Supplier technical project |
Unique project for PPG where supplier lab and technical personnel used |
Actual $ expense avoided determined by technical/buyer/SBU accounting |
Variability reduction
(Specification Optimization) |
Improvement in consistency leading to better end product performance |
SPC data, Plant operations, Technical, SBU Accounting verify actual savings. (cost savings for the 1st full year only) |
Reformulation
(Material Substitution) |
Actual formula cost reduction multiplied by the gallons per year produced |
Technical/Buyer/SBU accounting requote formula to determine savings |
|
Alternative green or eco-friendly products and processes |
Environmental benefits clearlyidentified with supporting data |
Supplier/Buyer/Plant personnel confirm $ saved on annual basis back to SBU. (cost savings for the 1st full year only) |
Supply Chain Logistics
|
Measure
|
Determination/Confirmation
|
|
Packaging Optimization and Recycling |
Actual reduction in waste, production, or conversion costs |
Supplier/Buyer/Plant personnel
confirm $ saved on annual basis back
to SBU. (cost savings for the 1st full
year only) |
|
Duty reduction, drawback |
Actual dollars refunded to SBU |
Supplier/Buyer/Distribution personnel confirm and credit $ on annual basis back to SBU |
|
Packaging Optimization and Recycling |
Reduction in virgin material used in packaging |
Confirm $ saved on annual basis |
|
Regulatory compliance |
$ paid by supplier to help PPG obtain regulatory compliance in given country |
Technical/Product safety verify |
|
|
|
|
SOFT SAVINGS:
|
Commercial
|
Measure
|
Determination/Confirmation
|
|
Minority, Women, Veteran and Hub Zone Vendors |
Direct minority spending credit of 2% of prior year spend with PPG |
Minority Supplier must provide proof of certification by NMSDC, SBA, WBENC or NWBOC |
|
Incremental year over year increase in purchase of PPG products |
Credit calculated as 25% of validated increase in purchase of PPG products. |
Supplier must establish current spend with PPG & confirm / validate incremental buy |
Business Process Improvement
|
Measure
|
Determination/Confirmation
|
|
Certificate of Compliance (elimination of Certificate of Analysis) |
Credit $5,000 for each location where COA's are eliminated |
QA/purchasing verification |
|
Submit Champ Code req. on time |
Credit $5,000 |
Subjective judgment of purchasing/Material Tech |
|
Submit Cert. of Origin on time (NAFTA certificate) |
Credit $5,000 |
Subjective judgment of purchasing/Material Tech |
|
PCARD |
Elimination of current procure to pay process steps |
$50 for each Purchase Order eliminated.
$10 for each Invoice eliminated.
1% of the total dollars transferred to PCARD.
(cost savings for the 1st full year only) |
|
E-Buy |
$10 per electronic invoice processed including PCard payments.
$5000 for full enablement on ASN with PPG e-Buy |
Supplier/buyer confirms how many electronic invoices or Pcard payments processed through e-Buy. (cost savings for the 1st full year only) |
|
Pay on Receipt |
$10 per invoice cost eliminated |
Supplier/Buyer/Accounting confirm how many invoices eliminated on annual basis. (cost savings for the 1st full year only) |
|
EFT |
$0.375 per check cost eliminated
(one payment per month) |
Buyer/Treasury calculates number of checks eliminated on annual basis. (cost savings for the 1st full year only) |
|
EDI, Internet |
Elimination of planning for material, order placement, COA entry etc. |
Plant operations, SBU accounting verifies employee's work time allocated elsewhere. (cost savings for the 1st full year only) |
Operational Process Improvement
|
Measure
|
Determination/Confirmation
|
|
Safety/Environmental |
Credit $10,000 for each potential safety hazard eliminated |
Plant operations/Safety management judgment |
Cycle time reduction
(Soft) |
Lead-time from customer order placement to delivery improved by supplier proposal |
Actual conversion cost to improve manufacture finished product. (Accounting manual quote required ) |
|
Bar coding |
Credit $10,000 for each location |
Plant operations/Purchasing verify |
|
Alternative “Green or Eco-friendly products and processes |
$25,000 credit |
Green or environmental label or certification |
|
Carbon emissions and climate change mitigation strategies |
Credit $25,000 |
Completed Carbon Disclosure Project (type) form. |
Global Initiatives
|
Measure
|
Determination/Confirmation
|
|
Global Specs |
Mutually agreed upon global specs. - $1000/material |
Technical/QA/Material Tech. verify |
|
|
|
|
|
New Markets/New Products |
Global specs./Global availability/Global pricing - $50,000/material |
Global Purchasing verify. |
Quality/Innovation
|
Measure
|
Determination/Confirmation
|
|
Defect Free Delivery |
Credit $25,000 per supplier mfg. facility on an annual basis for zero defects |
QA/Purchasing/Supplier verify |
|
ISO Registration (quality assurance and environmental) & Responsible Care (RC) & Sustainability Policy |
Achieve ISO9000:2000, ISO/TS16949, ISO14000 and/or RC registration. Sustainability policy established. Credit $10,000 per location - 1st yr only |
Proof by policy statement and/or certificate(s) submitted to Purchasing |
|
Exclusively designed products |
Helping PPG develop products |
Credit based on judgment by R&D |
|
Joint engineering/research |
Helping PPG develop products |
Credit based on judgment by R&D |
BMAP notification
(Build of Material Approval Process) |
Credit $5,000 per location |
Timely notification of mfg. site change or other changes where PPG can be proactive in customer notification |
|
Training |
Supplier pays for training for PPG end customer or PPG personnel |
PPG Sales/Purchasing verify, cost of doing business does not qualify |