Overview: Buying more for less

If life were ideal, we wouldn’t have to be frugal. Revenue would always be higher than expenses, and we would laugh all the way to the bank. Reality is that revenues are harder to come by, and expenses keep escalating until the two paths cross and you have to head to the bank for a withdrawal.

This is what happened to Inco in 1998, when it posted a loss of US$103 million, coinciding with a low in the nickel price. As there was no way to guarantee a better metal market, the only solution was to reduce costs. Inco launched a two-year breakthrough project initiative–the Global Procurement and Logistics Project headed by senior project manager Graham Hodder–to unearth large and small ways to reduce spending on an ongoing basis.

People in all parts of the company have found opportunities to save money. Working with selected vendors across the divisions has helped reduced costs through volume buying. One of the biggest reductions has been in energy spending (see “Energy Savings Mount in Ontario”, p.35). “We created over Cdn$49 million in annualized cost savings in 2000 and Cdn$40.8 million in 2001,” says Hodder.

Using the Quadrem e-marketplace is a separate but related effort to save money by buying goods on-line. Inco has a program to e-enable its business systems to take full advantage of Quadrem.