What type of buyer do your personality, circumstances, and experience make you for your organization?
Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.
We are looking at behaviors of how we purchase items both as individuals and as businesses this week to discover the connections between what we want to do and what we actually do when it comes to buying. Today we continue looking at buying behaviors with:
Bob is the Miser. Bob and his family make a good living. They earn, they save, they spend and generally have enough cash at any one time to weather the needs and emergencies life throws at them. In spite of having a healthy bank account, Bob hates to overspend for anything. “I didn’t get rich by blowing my money on overpriced items,” is his favorite saying and his purchasing habits model that. Bob will find every deal even if it means driving twice the distance he normally would to save even a little bit of money. At times he drives his family crazy with his “penny-pinching” ways as even when on vacation Bob questions every cent and never believes that the first price he sees is the final price he can get.
Great savings – Companies that operate like Bob are known for achieving terrific savings and great contracts for their business. By reviewing and scrutinizing every penny the company spends there are few times when these companies would feel that their suppliers are getting the better of them. If it means switching a supplier they have done business with for 20 years to save an extra 3% they will do that. Businesses like this, however, generally expect to get the same quality of better from their new suppliers. They are the “wanting your cake and eat it to” buyers.
Strained Relationships – To achieve the savings mentioned above, most procurement professionals will tell you that a cost-only mentality will eventually lead to major problems down the road. Companies that take this approach develop two types of strained relationships; externally with the vendor and internally with operations. Suppliers who see that their customer only cares about low prices at any cost tend to deliver just that. They won’t deliver value-added services and typically won’t go above and beyond for their customers. This causes strains with the operations of a company because they are trying to conduct business and need their suppliers to service them, delivering on time and helping when a crisis comes. This can cause resentment internally and lead to bigger issues.
Juice Worth the Squeeze – The Miser purchasing behavior looks to save money anyway possible. No project is too small and every penny is worth pursuing. In theory this is a good practice until it creates situations that cost the company more time and resources then could be achieved by getting the savings intended. Each category and project should be examined from a spend, complexity, and potential savings perspective to understand its priority; whether the “juice” potential is worth the “squeeze” effort. Every spend should be reviewed but priority should be put in place before executing projects.
Misers have the potential to get great savings for their companies but sometimes at the cost of valuable internal and external relationships. Understanding the priority of projects and working with the suppliers to achieve more than just price reduction can ensure everyone’s goals are met. For more information on how SafeSourcing can assist your team with getting the most “value” from your suppliers or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.
We look forward to your comments.