Last month, the Strategic Sourcing & Procurement Group on LinkedIn hosted our 1st Group conference call. Things got off to a great start with Chris Sawchuk leading a discussion on “key issues” in 2010.
Now, for our February call…
Kate Vitasek, who literally wrote the book on “Vested Outsourcing”, will be leading the discussion. So, come armed [...]
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For the past few weeks in the Strategic Sourcing & Procurement Group on LinkedIn, members have been debating:
“What direction do you think buyer-supplier relationship is likely to move in the future?”
Lots of perspective, opinions and advice. A few of the highlights …
Collaboration is key
“Collaborative partnerships of joint win / win. New study from Strategic Account Management Association (SAMA) that interviewed 178 Procurement Professionals found they received on average 41% more value from what they term collaborative partnerships; meaning TCO focused, not price / bid everything conflict oriented. Companies that are still around and that have made money in the past have realized that suppliers are a competitive advantage and that focusing on total cost reductions and partnerships is the only way to generate sustainable profitability. “
All suppliers are not equal
“While most buyers continue to adopt ‘Theory X’ assumptions about all their ‘vendors’, and inhabit a ‘critical parent’ ego state, a small but growing number of professional practitioners stratify their suppliers and attempt to build rapport with key suppliers based upon the adoption of an understanding of interpersonal processes.”
Process & technology help
“Supplier relation management is a key topic for most of the Strategic procurement and sourcing professional and this will help in building a more balanced relationship between Buyer and Supplier”
All categories are not equal
“Its all about Profiling the Category of Spend and the Supply base. Every Category is different and will have different attributes given the industry of the buying organization, spend levels, size of suppliers and market conditions.”
The common theme that ran through most of the responses was a dislike of overly generic, sweeping statements. In effect, most were saying that at some point, different categories, industries, suppliers and market conditions require different approaches.
Any predictions you’d care to add? Leave them in the Comments or join the Strategic Sourcing & Procurement Group and post them there.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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Last week in the Strategic Sourcing & Procurement Group on LinkedIn, I posed the question:
“What lessons or changes – brought on by the recession – will you continue during the recovery?”
Certainly, with the volatile business climate we’ve all experience in the last 18 months (and are hopefully emerging from), there are adjustments that have been made and take-aways that were taken to heart, which will continue to be applied through the recovery.
A few of the responses thus far…
Monitor Supplier Health
“One top lesson weathering the recession has raised is the significance of managing supplier financial health and other economic risks. Particularly, what role procurement should play to pro-actively identify potential problems early on and then to develop strategies and contingent actions to counterbalance supply chain failures that can eventually occur. Effective leadership (or ownership) of supply relationships equates to managing the outside partnerships as an extension to your own organization and strategies. When times improve, business partners should also expect and anticipate the unexpected as well.”
Predict (and plan for) the Unexpected
“During tough times we should ensure the supplier’s survival so that the supply chain is uninterrupted and works smooth. This process can be carried forward during the recovery period also. Procurement professionals pro actively understand and predict the market situation and help every one down the supply chain formulate their strategy based on this.”
Get Lean & Agile
“Reduce waste, maximize use of existing assets and redeploy to optimize, explore ways to Reuse outdated assets and Recycle spent equipment & consumables.”
It’s often said that the Great Depression was a defining moment that shaped The Greatest Generation’s attitudes and perceptions of money for the rest of their lives. I don’t know if this experience is really on that level, but surely we’ve all learned something we won’t soon forget, right?
So, what has the recession taught you about sourcing/procurement/spend management? And, which of those lessons you’ll carry over to the post-recession world?
Leave your insights in the Comments.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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Another topic has gotten a great deal of feedback in the Strategic Sourcing & Procurement Group on LinkedIn. A member asked:
“Is post tender negotiation acceptable? To what extent? Please share from your experiences what are the advantages and the risks of conducting a negotiation after a sealed-bid tender.”
Touchy subject to say the least, so the viewpoints expressed by the Group members provide a bit of perspective on how this impacts their organizations and relationships. A few of the highlights:
State your intentions up front:
“What does the tender say? Is negotiation talked about, at all? I would expect having some clause in the tender starting with ‘We reserve the right to negotiate with all/short-listed/top X proponents…’, that clause would tell you what you can do without having any issues.”
Costs savings sometimes have a price:
“I have seen a key project fall down because sealed bid tenders did not produce savings anticipated (and promised up the chain) and so the buyer tried to negotiate with the winning bidder – whilst it reduced the cost of the project it caused service levels to be compromised and opened leeway into the specification. Key learning in the post evaluation – any negotiation will always be 2 sided.”
Check the regulations:
“If you go by World bank Procurement policy, it is not allowed. If the said buyer is Government entity, than you will have to check Govt. Norms. In India for eg. Post Tender Opening, negotiation with L1 is not allowed. However, if you are not sure about the L1 price that you will get in Sealed Tender, you can choose to go for Reverse Auction.”
It can work…very well:
“From my experience? Procurement was forbidden to negotiate at all and just accepted bids. I became a procurement manager at the end of a contract cycle (just after contracts were signed) and noticed one supplier’s prices were way out of line with the others. I called the supplier and told them, and they said “we know, we’re going to lower them.’ That was a $300K phone call that took 30 seconds.”
Consider other approaches:
“If you want to negotiate than why limit to one Bidder, You can very well negotiate with L2, L3. If you are aware of market rate than why not go for Reverse Auction. If you are not aware of the same, than it is better that you go for Tender & heavily promote the tender such that more & more bidders participate & competitive drives the price down.”
What have been your experiences? Do you have any insights that might help other Supply Excellence readers or LinkedIn Group members?
Join the LinkedIn Strategic Sourcing & Procurement Group here.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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A member of the Buyer & Supplier Contracts Group on LinkedIn recently posted a very interesting question to the community:
In this Volatile market scenario is it ethical to renegotiate the existing contracts? Is this the only way to survive in the business?
In the current economic and credit climate, I’m sure a lot of companies are [...]
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