I constantly have executives tell me that they and their teams are too busy!
This is not a general complaint although the majority of folks believe they are overworked today. This complaint is in regards to using today’s e-procurement tools to reduce their costs across the board. How about, my team is to busy with other initiatives to take a look at this now. Or our buyers and category managers work eighty hours a week and already get the best prices.
I work a lot. I always have. More than most if you were to ask my customers, employees and other individuals I am associated with. When someone tells me their people work 80 hour weeks, I flat don’t believe them.
Here’s a simple fact: IT”S ABOUT THE MONEY! From a corporate perspective if you are not profitable, you will die. This holds true for both public and private companies.
Let’s talk about retail for a bit. I don’t care what retail vertical you work in, for the most part your cost of goods are going to be between a low of 50% (you better hope not) and a high of 70%. Most of these companies have net profit of a couple percent at best.
Fact: E-procurement tools and specifically reverse auctions will reduce your costs.
Fact: You do not know where all the available sources of supply are.
Fact: Neither you nor your team has time to look for them or vet them.
Fact: Once vetted neither you nor your team have time to collect and analyze bids from all available be sources of supply.
Fact: Because of the facts listed above, you can not guarantee that you are receiving the best price.
Let’s do some simple math. If you are a $100M retail company. If your net profit is 2%. If your cost of goods are 70%. If you were to assign 10% of that to a full service company that offers e-procurement tools in the form of a service. If they were to achieve 20% in savings for you.
Fact: Your Company would more than double their net profit.
If you still do not believe me, please contact me and test me.
I look forward to and appreciate your comments
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