In parts 1 and 2 of this blog series, I touched upon the challenges that many Purchasing Managers are currently facing in this dynamic environment. In order to react quickly to the frequent changes, many Purchasing Managers are inclined to respond as they often do.
The RF“X” process is used often to drive competition when the need for cost control or cost improvement arises. This process is a very valuable tool, but may become a great burden as well. This standard response could ultimately discourage suppliers from participating in the process if they are being asked to deliver a great deal of non-essential information and statistics. The biggest problem with the RF“X” process is an over-reliance on its results. It is very likely that suppliers will agree to additional concessions if they are engaged in a collaborative process.
Another reaction of some buyers is to agree to price increases with their incumbent suppliers. Buyers want to ensure that they will receive an ample supply of goods for their organization so as not to interrupt production. This type of decision is generally predicted upon a buyer’s assumption that they already know all of the available sources of supply and that they have good market visibility.
Another safe and commonly used tactic in an unstable economy is relying too much on purchasing technology tools and processes. Usually technology will only automate the inherent problems with the existing processes and will worsen results. Before investing in new technology, existing processes and tools should undergo a thorough analysis to identify opportunities for improvement.
Some Purchasing Managers who are concerned about the challenging business conditions may also take great pains to document to their senior management what the forces are that are driving less than optimum results.
In this series’ final installment, I will discuss how buyers can level the playing field with suppliers as they face a growing “buyer-side” deficit of information. Creative solutions using other available resources besides the lemon may exist. Stay tuned for ways to reach these creative solutions.
The RF“X” process is used often to drive competition when the need for cost control or cost improvement arises. This process is a very valuable tool, but may become a great burden as well. This standard response could ultimately discourage suppliers from participating in the process if they are being asked to deliver a great deal of non-essential information and statistics. The biggest problem with the RF“X” process is an over-reliance on its results. It is very likely that suppliers will agree to additional concessions if they are engaged in a collaborative process.
Another reaction of some buyers is to agree to price increases with their incumbent suppliers. Buyers want to ensure that they will receive an ample supply of goods for their organization so as not to interrupt production. This type of decision is generally predicted upon a buyer’s assumption that they already know all of the available sources of supply and that they have good market visibility.
Another safe and commonly used tactic in an unstable economy is relying too much on purchasing technology tools and processes. Usually technology will only automate the inherent problems with the existing processes and will worsen results. Before investing in new technology, existing processes and tools should undergo a thorough analysis to identify opportunities for improvement.
Some Purchasing Managers who are concerned about the challenging business conditions may also take great pains to document to their senior management what the forces are that are driving less than optimum results.
In this series’ final installment, I will discuss how buyers can level the playing field with suppliers as they face a growing “buyer-side” deficit of information. Creative solutions using other available resources besides the lemon may exist. Stay tuned for ways to reach these creative solutions.
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