What is cost avoidance in SAP LOD-ESO - Sourcing OnDemand?

SAP Term: cost avoidance

• Component: LOD-ESO

• Component Name: Sourcing OnDemand

• Description: The portion of total savings realized by avoiding certain costs, rather than by negotiating lower pricing with a given supplier, as structured in the master agreement.

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• Key Concepts: 
  Cost avoidance is a strategy used to reduce costs without reducing the quality of goods or services. It is a proactive approach to cost management that focuses on preventing costs from occurring in the first place. In SAP, cost avoidance is achieved through the use of LOD-ESO Sourcing OnDemand, which helps organizations identify and eliminate unnecessary costs. 
  
  How to Use it: 
  LOD-ESO Sourcing OnDemand is an SAP solution that helps organizations identify and eliminate unnecessary costs. It provides a comprehensive view of an organization’s spend and helps identify areas where cost savings can be achieved. It also provides insights into supplier performance and pricing trends, enabling organizations to make informed decisions about their sourcing strategies. 
  
  Tips & Tricks: 
  When using LOD-ESO Sourcing OnDemand, it is important to ensure that all relevant data is included in the analysis. This includes supplier performance data, pricing trends, and other relevant information. Additionally, it is important to regularly review the data to ensure that cost savings opportunities are being identified and acted upon. 
  
  Related Information: 
  For more information on cost avoidance and LOD-ESO Sourcing OnDemand, please visit the SAP website at https://www.sap.com/products/lod-eso-sourcing-ondemand.html. Additionally, there are a number of resources available online that provide further information on cost avoidance strategies and best practices.