Sourcing VS Buying – Putting it in Perspective – Part 3 of 5

June 6th, 2012

Do you source services and goods for your company the same way you shop for your family?

Today’s post is by Mark Davis; Sr. Vice President of Operations and CTO at SafeSourcing

We have been looking at how the concepts that influence how people purchase for themselves personally can be applied to the procurement world to help overcome hurdles and to better understand how to approach their own difficult procurement projects.

In today’s blog we will be looking at how looking only at low price can be seen by many retailers/suppliers as the wrong way to obtain what you are looking for.

Only about the lowest price

Anyone who regularly shops and cooks at home will tell you that when it comes to buying meat it is more than just about price.  Sure the average person can buy a 5 lb bag of frozen chicken breasts that is much cheaper than the 2 lbs of fresh free-range chicken breasts but many will tell you that the difference flavor and texture makes up for it.  Some people will still buy the frozen because it is cheaper, some will go for the taste and freshness in spite of the cost and most everyone else will fall in the middle.

This concept holds true again with big sourcing projects.  There are some customers who want nothing more than the “cheap frozen chicken” and so they go for the lowest price option only.  Unfortunately this has created a bad image for strategic sourcing tools as being low cost only tools that never factor in any thing else in the buying decision. 

The best strategic sourcing practices will show, however, that almost all projects fall somewhere in the middle where a customer needs to understand everything that sits between “frozen chicken” and “Just prepared today fresh chicken” and then analyze the cost, quality, service level, and reputation of each option.  This is how a company finds the best overall value for their company.

Tomorrow we will cover how understanding how other similar products and services are better can help us get more out of what we buy.

For more information about how we can assist with sourcing projects for your company, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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