Negotiate knowing what you SHOULD be paying

In a Perfect World

Imagine the negotiating edge you would have if you knew—and could demonstrate—what you SHOULD be paying for the products you buy, especially when suppliers come to you with sad tales about price increases they just can’t hold off any longer because of global commodity price rises.

This is not wishful thinking.

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Benchmark Your Organization’s Purchasing Effectiveness

Dear Colleague

Back in 2003, we created a simple, on-line survey to help Purchasing Professionals gauge their organization’s overall purchasing effectiveness.

The goals were to first measure attitudes and practices, and then offer concrete suggestions for making improvements. The initiative was successful: almost 3,000 people participated.

One of our readers had a great idea – why not re-do the survey? We could compare new results to the original numbers and see if there’s been a shift in attitudes and practices, over the past 7 years.

These 7 areas are covered and answers range between strongly agree and strongly disagree.

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Don’t Sweat the Details – It’s the Direction that Counts

Years ago, while working for Green Giant, I phoned our steel can sales rep to ask for a 4% reduction. We had information suggesting steel prices had fallen 8%.
He certainly wasn’t very happy and, as expected, argued against any decrease.

“Are you saying you’re still purchasing steel at the same price as before?” I asked. “That would be surprising.”

“Um… no, of course not”, he said, “but look – let me get back to you.”

To learn more, follow the Negotiating Nugget on Propurchaser.

Plant Tours Worth every Minute

The struggle to find “good fit” suppliers never ends. And finding the right suppliers has never been more important than right now. The global recession has put many companies’ very survival at stake.
How do you make sure – really sure – that your supplier is capable of going the distance providing you with the price, quality and service that your company and your customers demand?

Well, you could take the sales rep’s word for it. But we strongly suggest you see for yourself.

Simple as it sounds, an actual tour is the best way to gather reliable information about your supplier‘s all-important cost drivers, quality commitment and service culture.

It may seem like an inconvenience or a time-waster. But that plant tour will reveal so much about that supplier that it’s almost a crime not to go see. You really can’t do it from your office or even on the Internet. What is required is an old fashion, non-virtual plant tour…… You still gotta go look!

What follows is some lengthy, but worthwhile, advice on taking plant tours so that you get the insight and information you need to judge your suppliers’ capabilities and competitiveness.
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The Marketplace and the Five-Hundred Pound Gorilla

Purchasers know how hard it can be to convince our superiors & peers that we are doing a good job.
We struggle with Suppliers all the time, arguing, calculating, cajoling, pushing back to get the lowest possible all-in costs – and still we sometimes go over budget!

Does this mean we are doing a poor job? Probably not!

via The Marketplace and the Five-Hundred Pound Gorilla on Propurchaser.

Purchasers’ turn to shine

It’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.

Fishing with Suppliers

I 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 cost-savings 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.

Has our profession made strides over the last 7 years? – Part 1

Results of two time-staggered surveys

As you may know, back in 2003, we asked people to fill in an on-line survey to help Purchasing Professionals gauge their organization’s overall purchasing effectiveness.

We asked 7 questions that touched on senior management attitudes, corporate systems in place for gauging purchasing effectiveness, and the activities that consumed purchasers’ time.

We repeated the Purchasing Effectiveness Survey last month and over 600 people participated. We now have enough information to compare results and determine if anything has changed since 2003.

We plan to review one question each week. Here is the first one.

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Tag-Team to Wrestle Costs Down

 The arithmetic is simple: profits are being squeezed. Finding ways to drive down costs lower than your competition’s has become more important than ever.

Here, we describe a different approach to supplier negotiations that might help you gain an edge.

via Create a tag-team to wrestle cost down on Propurchaser.

Has the purchasing profession made strides over the last 7 years? – Part 2

Following the results of responses to the first area probed in our Purchasing Effectiveness Survey which focused on Senior Management’s view of Purchasing, we continue with results from the second area (leaving money on the table). 

Here are the results.

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