Even as the media reports doom and gloom, savvy buyers are able to score savings.
Today’s post is from Dave Wenig is the Senior Vice President of Sales and Services at SafeSourcing Inc
For those that follow the industry, you already know that the constraints placed on the construction industry are causing rising costs and limited availability of key construction materials. While I can certainly understand how this is a challenge for most organizations because they are being challenged on just about every procurement need they have, I also have seen how some rise to the challenge and overcome it.
For an example, let’s looks at a couple of recent RFQ event we hosted for a large real estate development company. Using recent quotes and costs from September, we were able to establish a previous baseline cost for items they needed. These ranged from appliances to doors to windows. What we learned was that the vendor community were telling us that the prices per their initial quotes had risen yet again in the last three months by somewhere between 15% and 20%.
What would you do in that situation?
Here’s what SafeSourcing’s customer did. As a result of their RFQ events, they established savings opportunity between 5.6% and 9.4% against the September prices. That’s remarkable in this market and leaves one to question what the real costs are and just how much of the price increases being passed along by vendors is necessary based on the market conditions and how much is margin.
There’s only one way to know.
The only thing to do as a buyer in the face of frequent cost increases of this size is to push back and verify. The best way to verify whether your vendors’ prices are fair is to invite open competition. The best way to host that is with a full-service eProcurement provider like SafeSourcing. To do anything less is to leave these purchases to chance and to risk becoming a high-margin account for your vendors in the name of “the market.”
For more information, please contact SafeSourcing, or keep overpaying!