The Buyer in All of Us Part V of VII. The Miser!

January 11th, 2021

Procurement Leaders! What type of a buyer are you personally and professionally? What about your team?

 

Today’s post is assembled by Ron Southard, CEO at SafeSourcing based on data from our white papers and past blogs at SafeSourcing Inc.

Bob is the Miser. He 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. Despite 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 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 “want their cake and eat it to” buyers.

Strained Relationships –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, no matter what, tend to deliver just that. They will not deliver value-added services and typically will not go above and beyond for their customers. This can cause strains with the operations of a company because they are trying to conduct business and need their suppliers to service them, deliver on time, and help 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 than the savings achieved. 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 all goals are met.

Please check back tomorrow for Part VI “The Traditionalist (aka The Contact Builder)” In order to learn more about SafeSourcing, please contact a SafeSourcing Customer Services Associate and ask about our risk free trial program.

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