As a regular reader of Sourcing Innovation, you’re on a quest to continually expand your knowledge of sourcing, procurement, and supply chain vendors, technologies, and best practices as this helps you to be the best professional you can be. The best way to do that is to make sure you stay on top of the wealth of free information available to you. One way to do so is to check the blog daily and watch for new additions to the sidebar (under “Free Resources“) and the resource site. Another way is to Subscribe. You can receive Sourcing Innovation blog posts in your inbox as well as newsletters, special announcements, and direct links to the latest resources available to you.
In addition, you can also sign up for the Next Level Purchasing Free Purchasing Resources Program which gives you free access to the Managing Supplier Performance course, a new purchasing tips article in your in-box every two weeks, and first access to Next Level Purchasing white-papers, including the 2008 Purchasing & Supply Management Carer & Skills Report.
The last two articles have been quite insightful. In Cost Reduction Ideas (Beyond Sourcing), Charles Dominick, the President of Next Level Purchasing, with the help of Rob Patton of Paladin Associates, outlined four ideas for achieving cost reductions without switching suppliers, including:
- Ask & You May Receive
Sometimes your suppliers have cost saving ideas … all you have to do is ask them. - Aggregation
Aggregate your need, especially for a commodity item, with other buyers. - Specification Rationalization
Use industry standard components and standardize on as few as possible. - Leveraging the Supply Chain
If you have multiple suppliers buying the same raw material, consider buying it for them if the combined volume nets a lower price.
In Supplier Partnerships: Your End of the Deal, Charles identified four common supplier goals that you can help your suppliers achieve. Helping your suppliers achieve their goals increases their commitment to your needs for cost reduction as a buyer — and I don’t think anyone can say they don’t need cost reductions in today’s market. The contributions you can make include:
- Reduced Payment Cycle
Right now, your suppliers are suffering from a credit crunch and most likely hurting way more than you are. Pay them in a reasonable time-frame, and go to the top of their favorite customer list. - Reduced Complexity
Customized reports, unique packaging requirements, and other “special requirements” come at a cost to your supplier (and, ultimately, to you). Eliminating unnecessary services, especially those without value-add, will reduce your supplier’s costs … and yours. - Better Sales Forecasts
This is actually a two-for-one. First of all, providing your supplier with better sales-forecasts will help it insure that it buys only what it needs to make your products. Buying more locks up cash in inventory that it can’t afford to lock up right now, and buying less means it will have to pay more on spot buys. Secondly, you can commit to multi-year deals, which increases your supplier’s confidence in future sales, and revenue–targets. This keeps your supplier on stable footing and keeps you on the preferred customer list. - Testimonials
Suppliers need sales now more than ever. If you will step up and certify the quality and reliability of the supplier to the marketplace, that will increase the supplier’s business and stability. Not only will this make you a favorite customer, but it will decrease your risk that your supplier goes out of business when you need it most.
If you haven’t, I would consider signing up for Next Level Purchasing’s Free Purchasing Resources Program. In my view, there are not enough good quality free resources out there, and you should take advantage of the few there are. And besides, when you consider that the last mailing reached over 97,500 subscribers, you know that it must consistently deliver information that you can use.