Use Peer Pressure to Drive Down Costs

Driving down costs by ‘coaxing’ voluntary behavior change. Anyone who survived the social pressure cooker of high school knows about the power of peer pressure.

For purchasing professionals trying to drive down cost, the good news is that peer pressure can have the same impact in corporate corridors as it did in the blackboard jungle.

from The Power of Peer Pressure in Propurchaser’s Negotiating Nuggets.

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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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.

A Supplier’s Advice for Purchasing Custom Tradeshow Exhibits & Environments

Dear Purchasing Professional,

We usually don’t get to speak with you directly when we respond to an RFP. But if we could, this is what we’d say.

We’d like you to know that to get the best value when buying custom tradeshow exhibits you need to take a slightly different purchasing approach. These products  require creative thinking (like advertising), and work best when uniquely crafted to fit your company’s needs.

Custom trade show exhibits are not one-size-fits-all. They differ from system or portable exhibits such as standard pop-up and tabletop exhibits. In a nutshell, they are properties created specifically for your company and should not be valued strictly on a basis of price.

“Will this design represent our company better and thus generate more leads, sales, and press coverage?” is what you really need to ask yourself. Read the rest of A Supplier’s Advice for Purchasing Custom Tradeshow Exhibits & Environments » » »

Use labor productivity to drive down purchase costs

 Suppliers often use wage increases to justify nudging up prices each year, usually 1 to 3%. And it’s hard to argue: – seems reasonable, and it’s less than inflation.
But wages aren’t the real issue – labor costs are.

And the reality is that the average cost of a ‘unit of labor‘ has risen very little, over the last 5 years – only about 1/2% per year.

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Rack Up 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

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.

Commodity prices volatility is the biggest risk – The CFO Summit

The Economist recently held an event for European Finance Leader called the CFO Summit in London. Over 100 CFOs and finance leaders met to discuss a lot of different issues.

Among these issues were:

• The outlook for policy, investment and the global economy over the next 12 months and how this impacts the CFO and influence on the board
• What steps can be taken to balance strict risk management with company growth ambitions. Should CFOs delay investments or pursue growth?
• How CFOs can prepare their business for growth in the year ahead by becoming a leader in the field of innovation
• Which strategies can be deployed in finance leaders’ push for growth in both mature and emerging markets—and what opportunities and challenges can CFOs expect to encounter in 2013 and beyond?

The CFOs were asked which aspects of supplier risks they are most concerned about. Here are their answers…

Read the rest of Commodity prices volatility is the biggest risk – The CFO Summit » » »

Beating the Budget Blues

Most Purchasers are called upon each year to prepare a budget for the products they buy. Given the uncertain marketplace, estimating Suppliers‘ prices is a tough job. It’ easy to go wrong, easy to make decisions you’ll come to regret.

Ths article will help you survive & thrive in this career minefield.

via Beating the Budget Blues on Propurchaser.