Balancing cost savings with quality is a key challenge for procurement professionals, especially in a competitive and uncertain market. How can you ensure that you get the best value from your suppliers without compromising on the quality of the products or services you need? Here are some tips to help you achieve this goal.
Before you start sourcing suppliers, you need to have a clear understanding of your needs and expectations. What are the specifications, standards, and performance criteria that you require from your suppliers? What are the risks and opportunities associated with different sourcing options? How will you measure and monitor the quality of the outcomes? By defining your needs upfront, you can avoid wasting time and money on suppliers that do not meet your requirements or deliver poor results.
It's important to remember, Procurement is not always about price / not always trying to be one up on the supplier, instead its a two way process that lets both sides win, thus strengthening the bond between each other. one tip to achieve the best outcome in times of uncertainty is negotiating on the length of the supply contract. example if an existing contract is only for 6 months, see if it can be extended to 12 months. This will encourage the supplier to give us a better price plus they are also assured of a continued business. What's in it for us? well, we have a reliable suppler who will surely reciprocate to help out when and if we need more quantities than we originally contracted for and in the shortest time possible!
Once you have defined your needs, you need to research the market and identify potential suppliers that can meet them. You can use various sources of information, such as online databases, industry reports, trade shows, referrals, and social media, to find and evaluate suppliers. You should look for suppliers that have relevant experience, expertise, reputation, and capacity to deliver quality products or services. You should also compare the prices, terms, and conditions of different suppliers to find the best value for money.
One of the cardinal principles of Sourcing which not many books will mention is about researching the political situation of the country and location where the supplier is based. take the current wars in the Middle East / Ukraine. if you want to limit or eliminate the disruption in your operations, a must is having suppliers in different geographical locations, especially for class A items, the shipping cost although scary may well be worth it during these times.
After you have shortlisted the suppliers that match your needs, you need to negotiate effectively with them to secure the best deal. You should prepare a negotiation strategy that outlines your objectives, priorities, alternatives, and limits. You should also communicate clearly and respectfully with the suppliers, and listen to their concerns and interests. You should aim for a win-win outcome that benefits both parties and builds trust and collaboration. You should also document the agreement and the quality expectations in a contract.
Once you have selected and contracted the suppliers, you need to manage the relationship with them to ensure that they deliver quality products or services. You should establish regular communication and feedback channels with the suppliers, and monitor their performance and compliance with the contract. You should also provide support and guidance to the suppliers, and address any issues or problems that arise. You should also seek opportunities to improve the relationship and the quality of the outcomes, such as by sharing best practices, implementing innovations, or conducting joint audits.
Finally, you need to evaluate the results of your sourcing activities and measure the quality of the products or services you receive from the suppliers. You should use various tools and methods, such as surveys, inspections, tests, reviews, or benchmarks, to assess the quality of the outcomes. You should also compare the actual results with the expected results and the contract terms. You should also solicit feedback from the suppliers and the internal stakeholders, and identify the strengths and weaknesses of the sourcing process. You should also recognize and reward the suppliers that deliver high-quality products or services, and take corrective actions for those that do not.
One of the things that's easily missed during the process of RFQ (request for quotation). how long does the supplier take to send you the quotation or has he completely ignored you! the length of time taken to send the quote tells you how organized / interested / reliable the prospective supplier is about the contract. The longer the time (without communicating the reason) taken the less reliable they could be. If they don't quote at all, they are not interested. Never follow up with a supplier for a quote!
some of the other things to consider, in a changing environment. research to see if your own product can be made differently with alternate materials, materials that improve the carbon footprint, use recyclable material instead of plastics. one of the key drivers for company growth is being environmentally friendly. Most consumers these days prefer to buy only products made out of recyclable material as far as possible.