• Procurement has negotiated a YoY rate reduction on supplier & equipment generating savings at parity or exceeding CY spend - this is primarily caused by a significant YoY rate reduction coupled with a significant YoY volume increase. 

Examples:

1. Covid Testing Kits (2022)

• Prior Year Rate: $53.10/kit | Current Year Rate: $17.18/kit
• YoY Rate Reduction: $35.92/kit -> -67% YoY
• Prior Year Volume: 94,168 | Current Year Volume: 410,000 -> +335% YoY
• YoY Productivity: $14,727,200 -> Productivity is +109% greater than CY Spend
• Current Year Spend: $7,042,500

2. Bezel Replacement on Food Service Vending Machine (2025)

• Prior Year Rate: $590/bezel | Current Year Rate: $298/bezel
• YoY Rate Reduction: $292/bezel -> -50% YoY
• Prior Year Volume: 1,550 | Current Year Volume: 40,000 -> +2,481% YoY
• YoY Productivity: $11,695,200 -> Productivity is +98% greater than CY Spend
• Current Year Spend: $11,920,000

• The calculated productivity essentially indicates we have eliminated the cost from our spend - which is not true. 
• Productivity typically does not exceed 50%-75% of spend. 
• The productivity calculation set in our framework cannot be used when there is a significant change in rate and volume YoY
• Savings above this typical range raises concern and questions:
  • Are these savings sustainable?
  • Have all costs/investments to produce these savings been considered in this calculation?

• How can we measure productivity on true YoY rate savings when the framework calculation produces results that are incongruent to the foundational principle of productivity?

• Leverage and apply a different methodology that has been aligned and used in past projects with similar complications e.g. Covid Testing Kits in 2022:

% Change in YoY rate x current Year Spend

• This calculation ensures that the foundation and principles of productivity is upheld by maintaining the application of YoY rate change and CY volume via CY Spend.