Posts filed under 'Suppliers'
June 29th, 2007
David Bush - Iasta
SupplyManagement.com recently ran an interesting article entitled the foundation of local growth that examined how purchasers in South Africa are tackling the problems caused by the absence of a strong supply base and lack of training that provides some insights that we all can benefit from.
The article quotes Alec Erwin, the minister for public enterprises, who said that “when buyers focus on obtaining value for money they change their behavior in ways that encourage investment in local industry and the development of more competitive suppliers, which are foundations for economic growth and development” as well as “value-seeking buyers start appreciating their potential power to influence investment decisions.”
As the article rightly points out, buyers understand the cost structure and drivers of their supply chain and recognize the impact on suppliers of stability of demand and economies of scale. They recognize that best-in-class suppliers don’t just magically materialize, they result from collaborative efforts where the buyer works with a good, potentially strategic, supplier over a mid-term or, better yet, long term effort to take them from good to great to best-in-class. For much more in depth discussion on this topic Sourcing Innovation dives in and states, the key to sourcing success is to Collaborate, Collaborate, Collaborate, Collaborate.
Entry Filed under: General, Suppliers
June 20th, 2007
Michael Lamoureux
Aberdeen just released its report on Supplier Enablement, Connecting with Suppliers to Build Lasting Relationships which found that supplier enablement continues to be one of the top three challenges for procurement professionals looking to transform their procurement organizations, gain better visibility into their supplier enablement processes and supplier relationships, and increase spend under management.
According to the study, best-in-class enterprises demonstrate that supplier enablement can positively impact the business when the right technologies and practices are employed. Best-in-class enterprises, which have 78% under management compared to an average of 44% for all other peer enterprises, enable 50% of their suppliers versus the 23% enabled by their peers, are 25% more likely to document and share their best practices, and are almost twice as likely to have full visibility into enablement activities, realize transaction processing costs 47% lower than their peers. Thus, this study confirms which many of us were starting to suspect, that supplier enablement not only makes suppliers feel good, but generates significant bottom line savings for an organization.
Aberdeen defines an enabled supplier relationship as one that includes one or all of the following capabilities:
- automated exchange of documents and communications
- on-line catalog management
- active management of supplier information through a self-service process
Of these activities, the third is the most important. When it comes time to source a category, it takes little effort to click the “send” button to send a document to a supplier, and you do not care about the entire catalog - just the product(s) in question. However, if you do not know who your suppliers are, what they can provide you with, and how to contact them, and the relevant individuals in the organization, you will not be very productive. Moreover, with large companies typically having tens of thousands of suppliers, managing this information is an onerous task - but if you are a large customer, it takes very little effort for a supplier to manage their information for you - especially if they want your business.
So what’s the best way to achieve supplier enablement? If at all possible, select a sourcing suite that has, or is about to have, supplier (self) management capabilities (like your forum sponsor, Iasta, that will be releasing an initial version of Supplier Management with a Supplier Self-Service portal in the fall), or a solution that integrates into the sourcing and/or procurement suites you already use. If this is not possible, I’d recommend going with a specialty provider of supplier information management (SIM) services, like Aravo who specialize in integrating SIM management applications into the sourcing, procurement, and / or ERP tools that you already have.
Then, as Aberdeen so eloquently states, include suppliers in the enablement process - leverage their experience and technologies to ensure collaborative and efficient interactions during enablement and through the lifetime of the relationship.
Finally, as Aberdeen also points out, be sure to standardize processes along the way that leverage leading technologies, like XML (eXtensible Markup Language) and SOA (Services Oriented Architecture), and leading 3rd party services, such as Ariba’s Supplier Network, Austin Tetra’s integration services, or Integration Point’s Global Trade Management software.
Entry Filed under: Analysts/Research, General, Supplier Performance, Suppliers, Supply Management Best Practices
May 21st, 2007
Sean Delaney - Iasta UK
I know this has been written about before but we cannot under estimate China’s effect on world economic growth over the last 15 years. The low wage Chinese economy has been a major influence on prices and in some instances deflation in most developed countries.
However, is the party all going to come to an end? More crucially what impact will this have on our low cost country sourcing strategies?
Let me elaborate…..in a recent article it stated there were some concerns about the state of the Chinese economy but there is a danger that these concerns could be “prone to being overdone”.
Taking this article on its own then I would agree with this summary but when you take this in the context with other factors I think the issue is a lot bigger.
Firstly, this year China has tentatively raised interest rates in an effort to slow growth. However, this intervention has had little effect with GDP increasing from 10% in Qtr4 of 2006 to approximately 11% in the first quarter of 2007…and that’s the official line real GDP and inflation could be a whole lot higher.
Secondly, the central bank allowed some limited realignment of the exchange rates (it is still estimated that the currency is some 15 – 20% undervalued). Since interest rate rises have had little effect it seems obvious that the Government will have to intervene in exchange rates to stem demand for exports.
Thirdly, in an effort to standardise the corporation tax system the Chinese Government are planning to increase the corporation tax for foreign companies from 15% to 25%.
Fourthly, if that wasn’t enough there are signs of wage inflation within the economy both in white colour and blue colour workers.
Finally, due to the developing worlds’ insatiable demand for commodities, prices are at an all time high. Since these are generally input costs it seems inevitable that output prices would need to rise to compensate.
I could be accused of overdoing the issue here but it seems to me that the price pressures are real. Somebody said once that if it looks like a duck and quacks then maybe it is a duck!
In much the same way during the 70’s the dependence of the industrialized world on OPEC oil was exposed when prices were increased dramatically. The question is, could rising price of Chinese exports have the same effect?
In my opinion, the Sourcing community is certainly going to have some challenging times ahead. For example, at which point do you change your policy on Low Cost Country Sourcing, what are the triggers and when are they likely to arise?
In many instances, this decision is already finely balanced, for example, the long lead times are not exactly suited to say the retail industry.
Take Arcadia (£1.8bn turnover) clothing retailer in the UK made the strategic move to shift production from the Far East to countries like Turkey. Highly Fashionable products can be on the shelf 3 weeks quicker than sourcing from the Far East.
eSourcing has to play its part but the question is how. Here are some thoughts:
- Increase the visibility of your spend. If you are not doing so then start using spend analysis software. This will help to understand areas of spend that have been untouched.
- In conjunction with SA, projects will have to be run on a much more frequent basis. Look at smaller values and train administration staff to host projects.
- Cost avoidance projects are as important. Do not take incumbent supplier price increases on the chin. Spend time analysing the pricing matrices and possibly share the benefits of projects.
- Cost saving and sharing with third parties. Look at the opportunities and be realistic about the time scale v’s the benefit. If the analysis says it will work – make it and dedicate resources to it. The next collaboration project will be easier than the last.
- Dedicate more time to nurturing the product develop process. Influence spend decisions earlier. (Far Easier to accomplish if staff and processes are aligned with the organisations eSourcing goals).
It is difficult gauge the exact timing and the exact impact. However, what I do know is that each country will feel the impact differently and those without a flexible exchange rate could be more at risk. Of course, I could be “overdoing” the risk?
Entry Filed under: General, Global Supply Issues/Risk, Spend Analysis, Suppliers, Supply Management Best Practices, e-Sourcing Marketplace
April 13th, 2007
David Bush - Iasta
7. What about language issues? Americans generally only speak English.
For India, suppliers tend to have good written English skills. Spoken English can be difficult because of different accents and because of poor telecom connections. A US buyer unfamiliar with speaking with people from India will need perhaps 5 or 10 hours of experience speaking on the phone with people in India before finding it easy to communicate by phone.
For China, suppliers tend to have working written English skills. Email serves as a good medium for communication. Phone discussions are more difficult – Chinese suppliers may have poor English skills, and cultural issues may preclude a meaningful conversation (e.g. a Chinese supplier may say “yes” to mean “I hear you” rather than to mean “I agree”).
8. Are there common “red flags” we should know about before selecting a LCCS supplier?
A big one is if the supplier has a lack of experience providing material to the West.
9. When a company works with a 3rd party vendor to help identify, qualify and select a LCCS supplier, what range of deliverables should they expect?
The depth of service varies depending on the needs of the buyer. A buyer new to LCCS sourcing may want the 3rd party vendor to handle.
a) Getting information on suppliers through Requests for Information
b) Eliciting quotes
c) Conducting preliminary site visits
d) Hosting US buyers to visit finalist suppliers
e) Helping conduct final negotiations
f) Helping with design
g) Conducting first part approval
h) Conducting production run quality audits
i) Arranging transportation to the US
j) Arranging customs clearance
k) Arranging transportation from Port or Entry in the US to buyer site
10.What happens if something goes wrong? Can a 3rd party vendor help?
The 3rd party vendor can definitely help, especially if the buyer is new to LCCS sourcing. The 3rd party vendor can work with the supplier or the shipper to resolve production and delivery issues.
11. Are their commodities that should rarely be sourced via a LCCS supplier?
Commodities that are less frequently sourced are those that are expensive to ship because they cube out quickly or because they are very fragile, those that have short lead times, and those that are low volume and require frequent design modifications.
Thanks for your thoughts, Carl!
Entry Filed under: General, Global Supply Issues/Risk, Interviews, Suppliers
April 12th, 2007
David Bush - Iasta
Today, we welcome Carl Greppin from Transpac Access. We took some time to ask Carl questions about Low Cost Country Sourcing to get details on some of the finer points of this process. Part II of this interview will be up tomorrow. There are widely varying opinions about LCCS and best practices, we welcome any additional comments on this topic.
1. There is still lots of buzz about low-cost country sourcing (LCCS).
• What should a company do to help decide whether to pursue LCCS strategies?
A company should thoroughly review everything it buys and determine which materials are best suited for LCCS.
Criteria include:
a) Savings - potential savings that could be attained
b) Experience – the experience that the LCC supply base has with providing similar materials to the West
c) Implementability – how easy it would be for the buyer to move materials to a new supply base
•Is it right for all companies?
Not necessarily. Some materials and services are better suited than others for LCCS. For some companies, such as those that provide services such as temporary labor in the United States, LCCS may not be a viable option.
2. Is LCCS only about using suppliers from other countries?
No - LCCS can also involve helping a company’s domestic suppliers use LCCS for their supply base.
3. I hear one needs to conduct in-depth due diligence on new LCCS suppliers. What does that entail?
Due diligence entails getting thorough information from suppliers on items such as English speaking and writing skills, experience with providing materials to the West, equipment, capacity utilization, other customers. Due diligence also entails conducting site visits to ensure provided information is correct, to inspect production and quality systems, and to determine if there is a workable chemistry between the buyers and the supplier.
4. What additional costs do I need to consider when determining whether to pursue a LCCS strategy?
There are a number of additional costs to consider. International transportation costs can be large, depending on the type of material being imported. Inventory carrying costs can be a factor since the buyer’s Inventory Days will become higher. There will be customs and brokerage costs. And there will be additional administrative costs, especially in the first year, as the buyer spends effort to learn how to operate with LCCS suppliers.
5. What are the “hot” low-cost regions now?
Right now, the “hot” low-cost regions are China for manufactured materials and India for services.
6. Are some regions easier to work with than others?
Chinese suppliers tend to be responsive and reliable. Chinese suppliers are also becoming adept at dealing with buyers from the States, so this is currently a region that is fairly easy to work with.
Entry Filed under: General, Global Supply Issues/Risk, Interviews, Suppliers
April 9th, 2007
David Bush - Iasta
According to a recent article in Purchasing, suppliers who stand out are those willing to act as partners and that when you find them you should foster the relationship by communicating with them openly - early and often.
Consider using supplier forums to explain to suppliers what it takes for you to consider them best in class and the criteria you will use to measure them by. Explain your marketing dynamics, what you are doing, where you are going, why quality is critical, and what you see a supplier’s role as. If a supplier does not understand what it takes to be best in class, how can you expect the supplier to reach that level.
In today’s marketplace, where assurance of supply, quality, and regulatory compliance and service is often more important than cost, good supplier performance is critical. But best-in-class is difficult to achieve, and integration is critical.
The article offered three tips for buyers that are useful:
- Know exactly what you need from suppliers beyond the actual components or services they provide
- Communicate regularly on your vision, the needs within your markets, and your expectations form suppliers
- Measure suppliers on their willingness to innovate and to invest in your future as well as their own
And I would offer one more:
- Start the process in your eSourcing event … not after making the award
Entry Filed under: General, Supplier Performance, Suppliers, Supply Management Best Practices
March 13th, 2007
David Bush - Iasta
I was recently speaking with a large food processing company VP-Purchasing and found the conversation nothing short of fascinating. Unfortunately, what is a very interesting topic to me has him in white knuckle mode, just trying to weather the storm. What is causing this pain and suffering in the food industry?
Corn
Corn has seen pricing track at a 10 year average of $2.30 per bushel, this company planned in the $3.30 - $3.50 per bushel range and the futures markets are trading at a whopping $4.30 per bushel which is now causing tens of millions of dollars in purchasing “headwind”. I think many people can triangulate the problem coming from the nation’s recent drive towards ethanol and alternative fuels. Clearly, our oil dependence puts the US in a constant uncomfortable position and we need to find and pursue alternative energy sources but it is important to recognize how waiting so long and now acting is causing a ripple effect that will impact virtually everything.
Since the government is heavily subsidizing the corn production for ethanol refining, it is more profitable for farms to devote land to corn for non-food use. This directly impacts the cost of pork, beef, chicken, milk and many others because feed corn is now fuel corn. Potatoes and soybeans are facing similar pricing shock treatment because the cost of land has skyrocketed for non corn usage as an opportunity cost of forsaking corn production.
These cost increases will now effect all consumers in the form of tax burdens from the subsidies and broad increases among many food products at the store and in restaurants. This will impact all sorts of industries as the supply chains overlap and ripple while consumer spending is likely reduced…uh oh, that now is going to impact almost every single industry as the spiral continues.
I know this company is doing everything possible to mitigate risks while reducing or avoiding costs, where possible, but it is clearly one of the more difficult positions I have heard in some time. I am not an economist nor a commodity expert but I can deduce that this situation is going to put pressure on a lot of sourcing professionals soon. If you can find six degrees of separation between your markets and corn, you should be already preparing for your supply management strategy and planning.
Entry Filed under: General, Global Supply Issues/Risk, Suppliers
February 23rd, 2007
David Bush - Iasta
Part of successfully launching a reverse auction project is preparing for the related questions and issues that might occur. Preemptively addressing some will avoid confusion and help the process. Suppliers might have questions about the process they are being involved in once an auction invitation and package is issued and accepted. Have these answers ready and suppliers will feel more comfortable with proceeding:
- How many auctions have you conducted?
- Has this category ever been auctioned previously?
- Did the buyer qualify the invited suppliers?
- Is the buyer willing to work with any of the invited suppliers?
- Is the actual buyer aware of the auction and involved in this process?
- What is the expected outcome of the auction and time expected to award?
- What other costs are included in the bid price (e.g. escalators, transportation costs, pallet exchange, etc.)?
- Is this a “winner-takes-all” auction for several products or will the lots be awarded individually?
- Is the buyer bound to award the order to the supplier that submits the lowest bid?
- Is the buyer obligated to re-open the auction if the winning bidder is disqualified?
- Are all terms and conditions for the order included in the auction specifications?
- Will any further negotiation take place after the event closes?
- Will finalists be invited for further presentations and award conclusion?
One other suggestion would be to limit the use of the term “reverse auction” as it tends to remind suppliers of the old days with wild and uncontrolled auction environments. We normally use terms like sourcing projects/events, competitive bids, or online negotiations which shows that the bid is more of a involved process, not just a price war.
There will always be questions about the project itself, as well. Being prepared with solid answers will show that a buyer is prepared and the event should be taken seriously. You cant expect a bidder to “sharpen their pencils” if you haven’t done it yourself.
Entry Filed under: General, Reverse Auctions, Suppliers, Supply Management Best Practices
December 6th, 2006
David Bush - Iasta
In the October Issue of Inside Supply Management, Lisanne Bogle of MGM Mirage, outlines ideas for effective supplier relationships. The article requires membership but she goes beyond the expected metrics of price, quality and service. All of these are, of course, important, but there are other things to consider for establishing a win-win relationship with suppliers.
- Supplier Size: “Bigger is not always better” and many times the perception of the smaller vendors is unfounded and highly inaccurate. We could not agree more - good take.
- Reciprocity: Should your suppliers also be your customers? A complicated question and, in some cases, yes. Ms. Bogle brings up points about ethical standards and restraint of trade considerations. The final rationale should be the total cost of ownership which is impacted by this.
- Supplier Diversity: Capturing and maintaining good data on supplier diversity can help with the problem of reducing supply base while increasing diversity spend. This is discussed as a very difficult problem, and rightly so but enriched data in a Spend Analysis package should help.
The article concludes with the idea that, regardless of size, under performers need to be communicated with and given time frames for correction or be removed from the supply base. All sound advice.
Entry Filed under: General, Suppliers, Supply Management Best Practices
December 4th, 2006
David Bush - Iasta
Tapping Into … Managing Suppliers
Collaborative sourcing and supplier relationship management software may both have a place in your organization, but it’s not the same place. They are two distinct approaches to managing suppliers. In order to reap the benefits of both, mind the gap — know when to keep them apart and how to bring them together.
So starts the recent article Mind the Gap in the November issue of Inside Supply Management which points out that the economic benefits of collaboration are clear, but only if its managed both effectively and selectively. “The wrong approach to collaboration may increase costs instead of cutting them, create confusion instead of clarity and drive suppliers away (even into bankruptcy) instead of bringing them on to the team”.
This can be due to the common mistake of “confusing two very different ways of managing suppliers — one way is through the use of supplier relationship management (SRM) software and the other is through full and open collaboration”.
Although the article does a great job of clarifying the difference between SRM and open collaboration, as well as providing the three requirements for effective collaboration, it does not do a good job of pointing out where each belongs in the sourcing cycle.
Although SRM can start pre-award, full collaboration should not begin until after an award decision has been made and a contract, which protects the proprietary and confidential information of both parties, has been put in place. SRM software, which monitors and tracks a supplier’s product quality, delivery, reliability, continuous improvement, innovation, and other performance metrics, based upon market and supplier data, can be used to scorecard suppliers during the RFX process. Collaboration, however, requires commitment. Confusing the two could impact the efficiency and effectiveness of your sourcing cycle and lead to hostility if you did not select the supplier(s) you were collaborating with before the award was determined since they might assume that they were going to be selected.
Entry Filed under: General, Supplier Performance, Suppliers, Supply Management Best Practices
November 28th, 2006
David Bush - Iasta
“Companies wanting to expand their supplier diversity programs can do so without sacrificing savings, according to a recent report by The Hackett Group.”
This begins an article recently run on CFO.com.
It follows on by stating that, “Using a minority-owned supplier has no effect on a company’s overall performance when it comes to procurement, says Christopher Sawchuk, senior business adviser for The Hackett Group. The strategic advisory firm surveyed 50 so-called “world-class” companies with a median revenue of $7 billion and a median procurement spend of $3 billion. “You can still be world-class and have a significant portion of your supply base focused on diverse suppliers,” Sawchuk says.
Unfortunately, the article is more stating that it can be done, and less about - how to do it. I poked around on the Hackett Group website and could not find any mention of the research, so I can offer no further guidance. Maybe Pierre will swing through and give us some direction?
Entry Filed under: General, Suppliers
November 17th, 2006
David Bush - Iasta
As per a recent article in SupplyManagement.com, Intellect, the UK trade body for the IT, telecoms, and electronics industries and law firm Beachcroft just released the Contract and Commercial Guidelines (pdf, members only, link off of Intellect home page or e-mail sjyates @beachcroft.com.uk) to help buyers and suppliers when drafting or negotiating contracts for IT products and services.
This is because “the contract can no longer be divorced from the deal as something that only lawyers need to worry about” in today’s procurement operations. This is not only a good resource for European procurement professionals, but for American procurement professionals who need to draft contracts with European suppliers.
A good guide can simplify the negotiation phase of sourcing, streamline your processes and improve your efficiency, leaving you more time to focus on contract management, which is where the savings actually materialize from a sourcing effort. After all, planned savings are only realized from effective contract management.
Entry Filed under: Contract Management, General, Suppliers
November 8th, 2006
David Bush - Iasta
I received a newsletter from Aptium Global which hit on the topic of supplier identification during the sourcing process. It is specifically focused on direct materials through MFG.com but I found it interesting.
Goodbye Alibaba…Hello MFG.com!
For sourcing professionals, identifying the right set of direct materials suppliers has always been a challenging task. Historically, organizations have relied on a variety of print and online databases such as Thomas Register and Alibaba.com to identify potential sources of supply (in addition to their own trusted global contacts). But on a recent project, our firm decided to consider another source, MFG.com, to gather an initial list of the most viable cost competitive suppliers.
Given our experience, MFG.com has a number of pros and cons at this early stage in their development. In short, it is a great tool for those procurement professionals who want to identify viable suppliers for new products or single line items. It can help companies not only gain a list of viable suppliers, but can also help guide a strategy in how best to present and lot part information to the supply base.
For those that do not know MFG.com, the site is a hub linking buying organizations with ninety three thousand suppliers, many of whom pay for an annual membership allowing them to post a profile on the site and receive invitations to RFQ events initiated by buyers. The site gives buyers the ability to post RFQs and award business on the site for free. Unlike other free online services, which serve solely as supplier search mechanisms, MFG.com performs more like a matching service – an online data service for the buying and selling of direct materials, if you will. When the buyer identifies the category while setting up the RFQ, suppliers are matched and invited to the RFQ based on the category(s) they indicate in their profile. Suppliers can decide whether to proceed with the RFQ based on the information given by the buyer, including any drawings or specifications related to the RFQ.
It is in our experience with MFQ.com, sourcing professionals are able to quickly narrow down the universe of suppliers to participate in later stages of the sourcing process. In addition, the system is straightforward to use and customer service is excellent. And thanks to MFG.com’s eBay-like feedback and rating system, it is possible to consider other organization’s accounts of actual supplier performance in decision making.
But a few challenges with MFG.com make it come up short as a stand alone sourcing platform. Most important, an individual RFQ must be issued for each part within a category. This makes it difficult for buyers who are seeking to rationalize a supply base, and optimize their spend across the fewest possible qualified suppliers It is also difficult for suppliers to give their best quotes, given the lack of advanced negotiation formats. Besides noting in the comments column that several RFQs are posted, MFG.com does not enable suppliers to provide volume discounts in their quotes. While discussing our feedback with MFG.com representatives, they told us that they recognize the need to consolidate multiple line items into one RFQ and plan on acquiring a new software program that will help them. Additionally, while the buyer is able to run a report of the supplier’s vital information and quotes for each part, MFQ.com does not provide the ability to view the category as a whole without manual manipulation of data after a bidding event.
Given our experience, we can recommend MFG.com without hesitation to organizations looking to broaden their direct materials supply base (especially in the metals arena). Without question, their solution takes existing supplier database approaches one step further into the sourcing process. But in our view, MFG.com is not a replacement for e-sourcing platforms from providers such as Ariba, SAP, Emptoris, Procuri, and Iasta, each of whom offers excellent capabilities today. As such, companies will get the best value from MFG.com by integrating its supplier identification and initial quote capability into a broader strategic sourcing approach that balances the need for total cost management with item-level cost savings.
Melissa Stephanou is Project Manager at Aptium Global where she leads multiple sourcing projects.
Entry Filed under: General, Suppliers, Technology, e-Sourcing Marketplace
October 23rd, 2006
David Bush - Iasta
Dr. Lamoureux of Sourcing Innovation recently pointed out the Frasers/PMACNewsLetter to me and this month it has a great article on how to Use labor productivity to drive down purchase costs.
The article points out that suppliers often use wage increases to justify small nudges in prices each year since it seems reasonable, but wages aren’t the real issue, labor costs are. For example, in Canada, labor productivity gains have been keeping costs down and the cost of a “unit of labor” has risen at the low rate of approximately 1.3% per year. Of course labor costs depend on productivity, but considering that this Stats Canada article (the first one that came up in Google) notes that US GDP rose at a rate double Canada in the second quarter of this year and that unit labor costs increased a mere 1.2% in the same quarter, you can see that this article is just as relevant to US buyers since labor costs could be significantly less then wage increases due to increased levels of productivity.
Thus, as the article notes, when negotiating with a supplier, be sure to discuss their productivity. After all, if they are really investing in technologies and processes to improve productivity, then they should not need to raise prices by much more than a mere percentage point to cover wage increases and stay competitive.
Entry Filed under: General, Supplier Performance, Suppliers
October 17th, 2006
David Bush - Iasta
I got a kick out of the recent Sweet Talk article on SupplyManagement.com. The article is based on an interview by the author with Sir Alan Sugar, a prominent figure in British Business, on Sir Alan’s views of Procurement.
Maybe it was the tone of the article or the wit of the author, but you have to like the no-nonsense quotes from Sir Alan:
- “If you don’t buy right, you have no business.”
- “If the buyer is a liar, he or she will lose all credibility. They’ll get away with it once or twice, afterwards they will have no credibility whatsoever. It’s as simple as that.”
- “You have to build relationships with your vendors, so that in good times and bad times you have support.”
- “It is vital not lose the commercial edge - being able to negotiate is an art.”
- “What I’ve seen over the 40 years I’ve been in business is young people coming in thinking that they’ve done a great job. ‘I’ve been mercenary picking out the existing supplier, bringing another one in,’ just to save a few pennies, but it all backfires in the end.”
- “You have to let your supplier earn some money. Pushing their back against the wall is not good.”
In other words, procurement is very important, as Michael Lamoureux over at Sourcing Innovation says, Collaboration is Key, and fairness is what it’s all about. That’s why we recommend our clients, be they software or services, use the full sourcing cycle backed up by a full sourcing suite, including decision optimization, to determine the best way to award the buy, and not just a lowest bidder takes all e-Auction, since the best award is one where everyone wins and works together to drive down prices. After all, any bid where your supplier is not making a fair profit will not only be unsustainable, but will probably end up costing you more in the long run when you have to quickly switch suppliers.
Entry Filed under: General, Global Supply Issues/Risk, Suppliers, Technology
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