List Categories | List All Articles | List Articles By Title
Suppliers as Your Partners in Cost Reduction
This article is one of the many articles still to come in which I will discuss very basic yet proven techniques that you could use immediately in your encounters with your suppliers.
Oh but wait, to find any value in this article, you must be a firm believer that Purchasing strategies have evolved from just 1) focusing on price and 2) focusing on quality, reliability, responsiveness and total cost to a much broader focus of building supplier relationships.
Did you know that for each $1.00 you save in your "total cost of ownership" reduction efforts, you will improve your bottom line profitability by $1.00? And did you also know that most companies do not get this concept and continue focusing their resources in all the wrong places?
Now is the time when I want to share with you 4 basic rules that have proven to work and work very well to help you create the partnership relationship with your supplier and allow them to equally benefit from the experience as well.
Rule #1: Getting direct cost savings is really a thing in the past. Getting savings has become increasingly difficult to achieve as your suppliers face similar predicaments themselves and operate with very little room in their margins to wiggle.
Rule #2: To affect your bottom line, using 80/20 rule, work on reasonable incentives to approach your top 20 suppliers with and build a "preferred" supplier base.
Rule #3: Communicate to your suppliers on "how to" earn a "preferred" supplier status and what is required of them to remain a "preferred" supplier.
Rule #4: Tell your suppliers what's in it for them (WIIFT) as they partner with you and build a "preferred" relationship.
To earn a "preferred" status means that your supplier will have the first shot to quote on new business, parts and project. In fact you can go so far as to create "earn a point" program every time you achieve your cost reduction goals using these techniques as they apply to your business.
Supplier earns a previously agreed upon point(s) when:
1) Shared tooling costs or shared engineering costs on a project
2) Extended terms: 60 or 90 day billing terms for a period of one year
3) Certified as "ship to stock" on all supplied parts or assemblies for a period of one year and remain compliant for every year thereafter
4) Ship zero defects for a period of one year and continue as such for every year thereafter
5) Work with purchasing, manufacturing or engineering to add value
Working with your suppliers to explore these techniques not only presents opportunities for you to reduce your "total cost of ownership" but also helps your suppliers to review, improve and streamline their processes and grow internally to be able to meet your expectations and earn that "preferred" supplier status.
Use this "total supply chain cost" model as your guide to isolate and focus on the actual cost elements impacting your bottom line profitability.
Total supply chain cost=
+Supplier performance cost
+Cost of acquisition
Vera Haitayan, Principal Consultant of The Leadership Laboratory., a California-based employee development and process improvement consulting firm and is the senior editor of The Stepping Stone Newsletter featuring leadership and process improvement best practices. http://www.1leadershiplab.com mailto: email@example.com
Games are a Reflection of Behavior
You are standing on a small stage yelling, "What's the name of the game?!""Win as much as you can!!!" comes roaring back."Who's responsible for your score?!""I am!!"The audience is composed of ninety men, all prisoners in a federal maximum security prison.
Power Pricing - Getting the Right Price for Your Products and Services
There's an old joke about the New York City blackout. Power was out everywhere, and the electric company couldn't figure out what was wrong or how to fix it.
Writing an RFP (Request for Proposal)
A while back, a potential client provided me with some general details of the writing work he wanted me to do for his company. Then he asked me to send him a proposal.
Negotiations: The Art, Science, & Sport of Online Deals
Negotiations can seem as complex as physics, and in fact, people go to college to study the science of negotiating just as they would the laws of nature. At the same time, negotiation is like an ancient art form, some sort of Zen mental jujitsu.
Negotiate to Your Advantage
The hardest and most important part of any negotiation is knowing when to walk away.Few things are sweeter than a successful negotiation session where both parties leave the table with a winning solution.
Barter: Its Not Just for Doctors Anymore
Time was, in the country, the local "doc" was as likely to get paid with a couple of chickens as a couple of dollars. Doctors these days won't stand for that, of course, but while some people have moved completely away from barter and stayed there, others have embraced it wholeheartedly.
Managing the Sales Negotiation Process
How many times have you heard:"You've got to drop your price by 10% or we will have no choice but to go with your competition.""You will have to make an exception to your policy if you want our business.
Four Ways To Work Out Business Disputes
Business owners have four options to resolve disputes with partners, vendors or customers. Each option is based on different assumptions, and entails a different cost.
How To Communicate Using Space
What Is Proxemics?The study of the communicative aspects of personal space and territory is called proxemics. Everyone is surrounded by an invisible zone of psychological comfort that follows us everywhere we travel.
Negotiating Tactics: Don't Let 'Good Guy - Bad Guy' Control the Sales Negotiation
Counter one of the classic negotiating gambits by addressing it directly.You've assembled a brilliant sales proposal for a new client and when you arrive to the meeting to hammer out the final details, you suddenly find yourself sitting across the table negotiating with two people.
The Art of Negotiation in 535 words
I want to get better at negotiation, but where to start? UK Amazon currently has 2332 books on negotiation. Google indexed nearly 4 million relevant (yeah right) pages.
Managing Conflict, in Life & Work: Using Ancient and Modern Approaches
"Conflict" is a word that can have varying degrees of severity, meaning, and implication for each individual or circumstance. For example, the conflict that is experienced in our current, daily lives seems insignificant in comparison to the Samurai, or those in war, who faced death on a regular basis.
Negotiating Tactics: How To Strike A Negotiable Opening Shot
There is no right or wrong to fire up your opening negotiation..
The Art of Haggling
Did you know that at one time in this country that there were no fixed prices on anything. You would go into a store and find an item you needed then you would begin the process of negotiating the price.
Negotiate Your Way to a Better Salary
1. Be persuasive: It's hard to force your boss to increase your compensation, and trying to do so can potentially damage your working relationship.
National and Cultural Negotiation Style
Cultural and national negotiation styles reflect communication behaviors and the priorities of that culture. Priorities such as trust, teamwork, non-confrontational situations, and openness are all along a sliding scale with each culture.
Negotiating: Forcing vs Compromising
Forcing is a hard-nosed approach that makes heavy demands from the outset. Emotions are displayed frequently, few concessions are made, and the bottom line may be concealed.
Win-Win Power Negotiating
Let's talk about win-win negotiating. Instead of trying to dominate the other person and trick him into doing things he wouldn't normally do, I believe that you should work with the other person to work out your problems and develop a solution with which both of you can win.
Making the Deal: Women as Negotiators
Negotiating is no game. It is not for the weak or the fragile.
Avoiding and Accomodating in Negotiation
The avoiding approach to negotiating is characterized by losing, leaving, and withdrawing. No commitments are made, and behavior is impersonal.
home | site map
All articles are copyright to their owners.
Note: this website lists articles, We do not Write Articles !