What are you doing to team up with your suppliers to achieve savings for both of you?
Today’s post is from our SafeSourcing Archives
It seems like every article and blog you read about sourcing deals with how to get the best value out of the relationships you have with your vendors and for most companies this is not a bad thing. One of the areas that frequently gets overlooked is the opportunity to leverage your company’s spend on behalf of your suppliers to achieve better pricing for you, them and their other customers. Products like pallets, roofing materials, corrugated or other packaging related material are perfect categories to look for this situation because they are frequently costs that are passed straight through from the manufacturer to your supplier to your company.
By negotiating better prices than your suppliers have themselves, you can help your suppliers lower their costs for their other customers and you. This gives them added incentive to work with you and can provide a much bigger spend opportunity to the vendors than just yours alone. Today’s blog will focus on some of the steps you can take in engaging all of the interested parties in this process.
Understand your portion – Before anything gets set in motion or communications are begun with outside suppliers or your incumbents, it will be critical to get an idea of where your volume of product from your suppliers falls in relation to their other customers. This understanding will help you and your company level set before speaking with your suppliers about the project. Your leverage will come in direct relation to the portion of spend your company represents with not only your incumbents but also the amount it would represent for a new supplier. If you make up 10% of your incumbents pass through cost for a product, you still may be able to run the project, however the leverage your spend and the results you achieve represent will need to tempered differently than if your spend represented 50% of your incumbents spend in this area.
Engage your suppliers – At the onset, engaging your suppliers and/or distributors in this process will be key. By letting them know in advance that you are looking to negotiate your volume on your own, you give them an opportunity to examine their current suppliers and customer needs and help you form an event that provides a much larger opportunity for the market. The other advantage to notifying your suppliers, regardless of their involvement, is that there will be no surprises once the process is complete and they understand the direction your company is going.
Tomorrow we will look at the final steps to consider when running projects for products on behalf of your suppliers. For more information about SafeSourcing 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.
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