Pivotal First Step

Posted: July 22nd, 2015 | Author: | Filed under: Uncategorized | No Comments »

This blog contains proven, useful techniques and best practices that will help you better prepare for negotiations with suppliers. The benefits are obvious, both for you and your employer.

But before you read any further, we strongly suggest you take a few minutes and watch this video:

Click for Video

It contains excerpts from a lecture given by Rod Sherkin at Bryant University, Rhode Island.  Watching will put everything below into context and – more importantly – accelerate your mastering of ProPurchaser’s CORE PRACTICES.


NUCOR CORP PROJECTS GROWTH IN 2016

Posted: February 9th, 2016 | Author: | Filed under: Asian Markets, Construction Materials, Economic Indicators, Metals, Negotiating with Suppliers, NEGOTIATOR'S TAKE, Nucor Corporation, Steel, US Dollar, USA, Yuan | Tags: , , , , , , , , , | No Comments »

NEGOTIATOR’S TAKE:  More signs U.S. steel prices may have bottomed – good time to consider locking in supply.



Steel prices have been under considerable pressure from imports

Like all U.S. steelmakers, Nucor (NYSE:NUE) has been under pressure from imports, and has been vocal about dumping. China produced 50% of world steel output in 2015, and declining domestic Chinese demand over the last few years, particularly declines in construction activity, has released this supply onto world markets. The U.S. industry’s complaints have been heard: in November the Commerce Department imposed countervailing duties of 236% on Chinese corrosion-resistant coil, and subsequently it imposed an additional 256% tariff on Chinese imports as well as lower ones on South Korean, Italian and Indian steel.





Help from tariffs have come too late

These measures may be too late to be of more than symbolic value. Total imports of finished steel declined 6.9% in 2015 and import market share fell eight percentage points to 26% over the course of the year, although the average of 29% was a record. Chinese imports fell 25.5%. But the damage has been done: prices are weak, as is capacity utilization.



steel prices

Graph Source: steelbenchmarker.com

 

Automobile sales and commercial construction

U. S. prices are their weakest in twelve years.  Thanks to automobile sales and commercial construction, the U.S. was one of very few countries with healthy steel demand in late 2013. U.S. prices rose in the face of declines everywhere else, so the U.S. became a magnet for foreign steel until prices collapsed.

Read the rest of this comprehensive (4-page),  ProPurchaser sourced article, HERE.

 

SOURCE: Seeking Alpha

ARTICLE AUTHOR: John Abbink – View John’s blog at: johnabbink.blogspot.ca

MORE ABOUT Seeking Alpha[.com]: HERE

 

 


SPECIALTY STEEL PRICES HIT 9-YEAR LOW

Posted: February 9th, 2016 | Author: | Filed under: Asian Markets, China, Commodities, Construction Materials, Economic Indicators, Japan, Metals, NEGOTIATOR'S TAKE, Specialty Steel, Steel, Yen, Yuan | Tags: , , , , , , , , , , , | No Comments »

 

NEGOTIATOR’S TAKE:  High-strength steel components for construction and other machinery should cost less than before.

 

Sluggish demand for construction materials

TOKYO — Specialty steel prices have fallen to their lowest in nine years due to sluggish demand for construction and mining equipment as building slows in China and resource prices slide.  Prices for structural steel – the specialty steel most produced – have been hit hard.  SC, a type of carbon steel used in machinery parts, sold recently for around 105 yen (90 cents) per kilogram in Tokyo, down 4.5% from autumn.  SCM, a high-strength alloy steel for machine structural use, has grown 4% cheaper at roughly 130 yen a kilogram.  Both are priced some 30% less than at their peak before the Lehman shock in 2008.  The decline relates to a plunge in demand for construction machinery, the main use of these steel materials.  The Japan Construction Equipment Manufacturers Association said shipments in 2015 fell 5.3% from the prior year.

 

Chinese mine development at a standstill

In addition to slower infrastructure work in China, mine development also is at a standstill due to plummeting prices for such natural resources as coal.  Large mining equipment requires enormous quantities of steel, but Hitachi Construction Machinery says it curtailed operations at its main domestic plant to reduce inventories, and the Japan Forging Association reports slower production at companies that process steel materials for use in construction machinery.

 

Machine tool materials and steel product wholesale procurement

Production of materials for machine tools also has slowed due to sluggish capital spending, forcing a drop in steel product procurement by wholesalers.  Falling prices of scrap steel are a factor as well, as electric-furnace steelmakers use it to produce specialty steel materials. The scrap market has plunged 30% since summer due to a drop in the Chinese steel market.

 

SOURCE: Nikkei Asian Review

FOLLOW: Nikkei Asian Review on Twitter | Nikkei Asian Review on Facebook | Nikkei Asian Review on LinkedIn

 


GREENDEX: Survey of Sustainable Consumption

Posted: February 8th, 2016 | Author: | Filed under: Best practices, Economic Indicators, Energy, Gem, Green Practice | Tags: , , , , , | No Comments »

Greendex

If your business is expanding into new markets or facing competition in existing ones, can you benefit from enhancing your green credentials to meet consumer preferences?

Greening your supply chain could provide a competitive edge in markets where consumers are increasingly concerned with environmental issues and making spending decisions based on those concerns.

Find what you can learn from the Greendex Survey.

 

ProPurchaser Green Practice: Greening you supply chain is increasingly crucial in today’s changing market.


Rack Up Savings

Posted: January 29th, 2016 | Author: | Filed under: Best practices, Gem, Negotiating with Suppliers, What's Happening in Our Profession | Tags: , , , , | No Comments »

Savings
Stan Hankowski, a seasoned Buyer with a major American retailer tells an intriguing story that shows how Purchasers can help themselves by helping their suppliers.

He went to market last year to buy steel racking. He expected higher prices because he’d been tracking steel costs and knew they had gone up sharply.

via Negotiating Nugget on Propurchaser.


Purchasers’ turn to shine

Posted: January 24th, 2016 | Author: | Filed under: Gem, What's Happening in Our Profession | Tags: , , , , | No Comments »

LeadershipIt’s still quite scary out there: recession clouds are still lurking. Sales volumes are struggling to rise; unfortunately, costs are struggling less, as suppliers pile on price increases, citing higher raw material costs as the reason.

Call to action

What can Purchasers do?……plenty, by taking a leadership role in pushing back costs. Makes sense when you think about it. Your role is critical, since purchases typically represent the largest single source of cost savings for most organizations. Try this 3-step approach.

via Purchasers’ Turn to Shine on Propurchaser.


TRUST YOUR SUPPLIERS BUT NOT THEIR DATA: A ProPurchaser INSIGHT

Posted: January 24th, 2016 | Author: | Filed under: Canada, Gem, Negotiating with Suppliers, Production costs, ProPurchaser Insight, Supplier's costs, Uncategorized, USA, What's Happening in Our Profession | Tags: , , , | No Comments »

 

 ProPurchaser INSIGHT: Trust your suppliers but not their data.

 

Man and woman shaking hands

Trust vs. Data

Of course you need to trust your suppliers: their products, delivery, quality and service.  Makes sense or why would you want to do business with them?  But that trust should not extend to the data they provide to support price increases!  It’s like asking the proverbial fox to guard the henhouse.

Having independent sources of marketplace information is hardly a new concept.  And so we were quite surprised by the results of a recent survey – 30% of the purchasers said their main sources of information for justifying price increases were the same suppliers who asked for the increases.

 

Outside information sources are essential

“Sorry to have to raise prices.  We have no choice because our own production costs are up.”  Suppliers would then produce charts showing increases in their raw materials or labor costs or both.

Outside sources of information are essential for two reasons:

  • First, outside sources allow you to gauge the reasonableness of a supplier’s request.  For example, in January 2016, two leading sources of steel costs information disagreed on price movement: one said up; the other down.  Not surprisingly, the ‘up’ figure was quoted by suppliers.
  • Second, outside sources alert you when your suppliers’ costs go down – something you are not likely to discover if you depend on suppliers for information.  Can hardly fault suppliers: no one wants to lower prices voluntarily.

 

Good news from ProPurchaser and our partners

There is good news: it’s never been easier to build a window into your suppliers’ costs.  A wealth of data about raw material and labor costs abounds on the internet.  Worth checking out, especially since many websites are priced so they pay for themselves the after the first time you use them.

 

Want to learn more?

If you’d like to learn more about other useful negotiating practices, please click HERE to view a ProPurchaser calendar of our upcoming educational webinars, held on a regular basis.

You are also invited to take out a complimentary 30-Day Trial (HERE) at ProPurchaser.com.  where you’ll find a wealth of information on suppliers’ raw material costs and more useful, original insights.

ARTICLE AUTHOR: Rod Sherkin, President of ProPurchaser.com

GET IN TOUCH! Email us at: membershipservices@propurchaser.com


LUMBER PRICES TUMBLE AS CHINESE DEMAND FALLS

Posted: January 21st, 2016 | Author: | Filed under: China, Construction Materials, Economic Indicators, Lumber, Negotiating with Suppliers, Uncategorized, Yuan | Tags: , , , , , , , , , , | No Comments »

 

NEGOTIATOR’S TAKE:  Wooden pallets and crating are ripe for re-negotiation because of lower lumber prices.

 

01.20.16 – Slowing of housing construction and re-modelling the cause

Lumber prices are down nearly 30% in the past 12 months as housing construction and remodeling in China have slowed due to the country’s tightening economy.  The value of Chinese imports in November totaled $498 million, down 26% year over year and down from an all-time high of nearly $900 million in April of 2014.

Log prices are also down about 30% from their April 2014 level and are now at their lowest level since early in 2009, according to the monthly Wood Resources International report.

 

Import prices have declined almost 30% in only 12 months

According to Wood Resources: “The reduction in house construction in China has resulted in a substantial decline in the importation of forest products during 2015…the total value of imported softwood logs and lumber has fallen 25% and import prices have declined almost 30% that past 12 months.”

 

Read the rest of this ProPurchaser sourced article, HERE.

 

SOURCE: 24/7 WALL ST
ARTICLE AUTHOR: Paul Ausick, Senior Editor – Follow Paul on TWITTER; on GOOGLE+
Follow 24/7 WALL ST: @247wallst on Twitter | 247wallst on Facebook

CHINA SET TO LOSE LEVERAGE AS CHEAP LABOR SOURCE

Posted: January 20th, 2016 | Author: | Filed under: Asian Markets, China, Deutsche Bank, Labour Costs, Uncategorized, US Dollar, USA, Yuan | Tags: , , , , , , , , , | No Comments »

 

NEGOTIATOR’S TAKE:  The advantages of sourcing from China are shrinking; savvy purchasers are looking at moving production back to North America.

 

01.19.16 – Sharp rise in wages will likely lead to further devaluation of the Yuan

Presidential hopeful Donald Trump’s campaign promise that he will get Apple Inc. to stop making their computers in China and start making them in the U.S. isn’t being taken seriously in some circles.  But looking beyond the Republican presidential front-runner’s rhetoric, the recent acceleration in wage growth in China suggests that the day when it becomes too expensive to outsource to that country may be closer than expected.  Though, the benefits to the U.S. economy may not be exactly what Trump envisions.

 

Deterioration in Chinese competitive edge

“Wages in China have grown much faster than in the U.S. and this has resulted in a significant deterioration in competitiveness in China,” Torsten Slok, chief international economist at Deutsche Bank, said in a note.  Chinese labor costs have risen 7% annually for the past 15 years while for the U.S. manufacturing sector, the growth rate has been negative, according to Deutsche Bank’s data.

 

Significant impact on U.S. economy

To counter the effect of higher wages, Slok expects the Chinese government to further weaken the Chinese currency this year, pushing the yuan USDCNY, -0.0790% down to 7 per U.S. dollar from 6.58 currently—roughly a 6% depreciation.  On the whole, a move of this magnitude isn’t likely to have a significant impact on the U.S. economy. . . . Read the rest of this ProPurchaser sourced article, HERE

 

SOURCE: MarketWatch

AUTHOR: Sue Chang, Markets Reporter – Bio at MarketWatch – Follow her on TWITTER


Fishing with Suppliers: A ProPurchaser CORE PRACTICE

Posted: January 19th, 2016 | Author: | Filed under: Best practices, Gem, Negotiating with Suppliers, What's Happening in Our Profession | Tags: , , , , | No Comments »

ProPurchaser CORE PRACTICE #5: Go “Fishing” with Suppliers.

 

Big fishI once had a very smart boss whose favorite expression was “Fish where the big fish are!”
So where do the “big fish” lurk for reducing costs for the products and services we purchase – in better pricing, in longer terms, in faster order processing, in speedier delivery? All important yes, but in my experience they are not the trophy-fish.

The best costsavings opportunities are to be found in your suppliers’ organizations: knowledge and ideas inside the heads of their managers, engineers, operations and planning staff.

via Negotiating Nugget on Propurchaser.


CONSTRUCTION MATERIALS PRICES STILL IN FREE FALL

Posted: January 18th, 2016 | Author: | Filed under: Associated Builders and Contractors (ABC), Construction Materials, Economic Indicators, Labor, Lumber, US Dollar, What's Happening in Our Profession, World Bank | Tags: , , , , , , , , , , , , , , | No Comments »

 

NEGOTIATOR’S TAKE:  Construction material costs continue to fall – a good time to ask your contractor to re-quote or perhaps go back to the market for fresh bids.

 

01.15.16 – Bureau of Labour Statistics Producer Price Index Reports

Construction material prices fell for the sixth consecutive month in December, losing 1.2 percent on a monthly basis and 4 percent on a yearly basis according to an analysis of the Bureau of Labor Statistics Producer Price Index released today by Associated Builders and Contractors (ABC).  Construction input prices have fallen 7.2 percent since peaking in August 2014, and have fallen in eleven of the previous sixteen months.  Nonresidential construction input prices exhibited similar declines, falling 1.1 percent for the month and 4 percent for the year.


“Construction input prices continued to sink to the end of 2015, due in large measure to global deflationary forces that have become increasingly apparent,” said ABC Chief Economist Anirban Basu.  “The World Bank predicts that the global economy will expand by less than three percent in 2016, very limited growth by historic standards.  Last year, the global economy expanded by just 2.4 percent, with significant weakness recorded in much of the emerging world.  Like last year, major emerging nations like Russia and Brazil are anticipated to be in recession.


“In addition, the U.S. dollar remains strong,” said Basu. “With only a couple of exceptions, the U.S. is the only major nation to increase interest rates.  If interest rates rise as anticipated, the dollar will strengthen further in 2016, placing additional downward pressure on input prices.  Even significant geopolitical events involving oil producing nations has not been enough to stem the decline in oil or other commodity prices.”


Only four key input prices expanded in December on a monthly basis….Read the rest of this ProPurchaser sourced article, HERE.

 

SOURCE: The American Surveyor

ARTICLE BY: Associated Builders and contractors (ABC)

 


 


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