ProPurchaser Best Practices

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It's the Direction That Counts

Trust Your Suppliers But Not Their Data

Of course you need to trust your suppliers: their products, delivery, quality and service . Makes sense or why would you want to do business with them?

But that trust should not extend to the data they provide to support price increases! It's like asking the proverbial fox to guard the henhouse.

Having independent sources of marketplace information is hardly a new concept. And so we were quite surprised by the results of a recent survey - 30% of the purchasers said their main sources of information for justifying price increases were the same suppliers who asked for the increases.

Outside sources of information are essential for two reasons.

“Sorry to have to raise prices. We have no choice because our own production costs are up”. Suppliers would then produce charts showing increases in their raw materials or labor costs or both.

Outside sources of information are essential for two reasons.

First, they allow you to gauge the reasonableness of a supplier’s request. For example, in January 2016, two leading sources of steel costs information disagreed on price movement: one said up; the other down. Not surprisingly, the ‘up’ figure was quoted by suppliers.

Can hardly fault suppliers: no one wants to lower prices voluntarily.

Secondly, outside sources alert you when your suppliers’ costs go down - something you are not likely to discover if you depend on suppliers for information. Can hardly fault suppliers: no one wants to lower prices voluntarily.

There is good news: it’s never been easier to build a window into your suppliers’ costs. A wealth of data about raw material and labor costs abounds on the internet. Worth checking out, especially since many websites are priced so they pay for themselves the first time you use them.

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