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Proposal Suggestions and Evaluation Process 

Suppliers participating in $AVE are expected to submit annual suggestions totaling 5% of their prior year spend with PPG. At least 60% of the $AVE dollar suggestions are expected to be associated with HARD SAVINGS as outlined in the $AVE Measurement Grid.

Measurement Grid

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

Measure

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