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.
The Bargain Hunter:
Sue is what we call a thrifty coupon cutter. She is on a fixed income since she lost her job and has had to take another, which makes less income. Since many of Sue’s expenses, especially those relating to her two children, are difficult to adjust, Sue must do everything she can to cut her expenses until she can grow her income back to a level she was accustomed to. Sue searches through the paper for coupons, pays attention to special discounts, and will even shop at multiple stores to get the items she needs at the best price available. These efforts take time and an investment from Sue, but it is worth it for her in a situation where the money is tight.
Many businesses are not unlike Sue. For one reason or another, their revenue stream may have taken a hit due to losing a major customer, having a major expense that has depleted capital, or from rising supplier costs. In these situations, companies must review their expenses and determine, as Sue did, where they can cut costs until they can return the company’s revenue to previous levels.
Cut the luxuries – The first step to take is to review those areas of expense that are not necessary. In Sue’s case, the cable TV package and restaurant meals were the first to go because they were luxuries and not necessary for her family to survive the reduced income situation. Many companies often follow this same strategy and will cut those “luxury” expenses that their company can live without.
Look for discounts – The second step is looking for discounts on the services and products that cannot be cut. In Sue’s case she found e-coupon sites, clipped coupons, and registered for discount programs from the places she shopped most. Many businesses will do the same thing, looking for suppliers who are offering deals on new business. However, changing suppliers or products introduces unknown variables in the equation that should be examined before deciding on full switches. Trying or testing a product or supplier first is a crucial part of this process.
Discover new sources – There may be times when it makes sense to split spend among more than one supplier so that the best deals on the items can be realized. This can require more effort managing multiple vendors, but like it did for Sue, the time investment may be worth the savings when multiple suppliers constantly compete for the business, with no one vendor guaranteed to keep the business by default.
Discount shoppers must invest more time, but circumstances often require this to get the needed savings to run a business. Keeping watch of the market and being familiar with multiple sources of supply is a big key to this model.
Please check back tomorrow for Part III “The Casual Saver”
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