What are you doing to team up with your suppliers in order to achieve savings for both of you?
Today’s post is our SafeSourcing Archives.
Yesterday we began taking a look at some of the ways you can arrange to run a sourcing project for products on behalf of your suppliers to increase the opportunity for the suppliers of those products, lower your suppliers’ costs while lowering your costs for those items or services as well. Today we will conclude the series by looking at the project itself and the process of using the results to achieve greater value for your company.
Determine the greater opportunity – Once you have determined where your spend lies in relation to your suppliers’ other customers and opened a dialog with them about your plans, it will be time to begin laying out the scope of what the project will entail. Much of this will be determined by the amount of involvement your suppliers wish to provide in the way of information and management of the process. The first major part of this step will be to understand if there are other products or services that need to be included in the project even if your company does not use them. These create a greater opportunity for the suppliers and will results in better results for you and your incumbent suppliers. The second part of this step is to determine the volume, frequency and location these items will need to be delivered to so that you can begin rounding out the specification and terms and conditions documentation.
Control the project yourself – No matter how much involvement your incumbent suppliers wish to provide you in this process, it is imperative that you own and manage the project from start to finish. The insight you will gain on these products and services throughout the process will be extremely valuable and will be the foundation by which the final negotiations are achieved with the manufacturers. Establishing and maintaining these relationships can also be important in later stages should there be customer service issues that your suppliers are unable to leverage properly themselves.
Leverage the results to your advantage – When the project is complete you will be left with a detailed view of the manufacturers, their offerings and their pricing. You will have at your disposal all of the tools necessary to not only negotiate better value from the manufacturers but also better terms for how those products and services are then charged to you from your suppliers. Your efforts will be used by your suppliers with all of their customers, improving their margins across the board. This type of leverage will allow you to reduce or eliminate upcharge percentages from your suppliers or possibly to receive some other benefit in exchange for the results you were able to achieve. This step would include reaching out to the manufacturer(s) selected and obtaining a letter of intent stating you are working with them and they will honor the pricing to your suppliers and their customers as well.
Sourcing projects on behalf of your suppliers may not be something you are used to running; however the benefits are just as real as traditional sourcing efforts. These projects provide manufacturers greater volume opportunities and provide your suppliers and their customers and you with better service, value and pricing and should be included in all annual project reviews. 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.