The Dark Economic Cloud Has A Silver Lining For Sourcing

There are at least three reasons why these rough economic times are great for sourcing professionals.

  1. With declining revenues, companies are looking to reduce costs to preserve profit margins. And which department specializes in reducing costs? Sourcing, of course!
  2. The weak global economy is a fine reason to ask a supplier to restructure a deal. If your organization must reduce costs in order to survive, there is no shame in asking your existing suppliers for price reductions. Many of them will recognize that your organization’s survival means continued business – perhaps even survival – for them. That makes win-win negotiation – and maintaining supplier performance – even easier.
  3. For many individuals, price reduction discussions are sometimes uncomfortable to start with long-time suppliers. But commodity prices have fallen. If you’ve ever felt that you need some type of ammunition to start a price reduction discussion, guess what? You have it!

2 Responses to The Dark Economic Cloud Has A Silver Lining For Sourcing

  1. Purchasing is always important in any times and now it’s a good time for buyers to implement business consolidation. Focusing greatly on key supplier, offer them more business and give them greater role in companies’ current and future business. Also this way reducing the exposure to potentially economically weak suppliers. So it’s a win win strategy for buyer and supplier both.
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  2. The focus must be on total supply chain costs and looking at all costs including inventory carrying costs, obsolescence, claims, productivity, adminsitrative costs, service levels/penalties,etc.
    The danger is to make short range decisions on price only that come back to haunt you in service and quality issues on a long term basis. You will want to keep all your tier 1 suppliers as they will be the key to your long range survival.
    John Fitzgerald-SEKO

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