Trust Your Suppliers, Not Their Data

By Rod Sherkin

April 21, 2016 at 7:46 AM

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 say their main sources of information for justifying price increases are the same suppliers that asked for the increases. 

"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. 

Second, 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 has 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. 



Tags: purchasing Supply chain management Negotiation Prices Procurement commodities sourcing costs
Category: Blog Post

Rod Sherkin

user_avatar

Rod Sherkin is the President of ProPurchaser.com Inc. Established in 1999, ProPurchaser provides purchasing professionals with information and tools to help them better prepare for negotiations and raise the profile and status of the purchasing profession by increasing senior-management awareness of its strategic, profit-boosting potential.

 


Please add a comment

You must be logged in to leave a reply. Login »


Related Content

Thought Leadership and the Demise of Your Third-Party MRO Outsourcing Program: Part 4

George E. Krauter

When one defines third-party MRO (3PMRO) success, one assumes that fundamental operations are being executed and that expectations are being met (i.e., ROI goals are surpassed} Read More

Guidance for Addressing the New Talent Acquisition Challenge

Dennis Bouley

The US Labor Department reported in March of this year that there were 6.6 million job openings, a record high. Although most of us applaud these numbers Read More

Millennials in Supply Chain Management Seek Advancement and Development Opportunities

Marisa Brown

Millennials working in the supply chain management field don’t fit the mold that the older generation assumes for them. APQC’s recent study Read More


Supplier Profiles

Staples

Staples Advantage is the one supplier that offers all the business solutions you need, all with the expertise of a specialty vendor. Read More

Digi-Key

It started in 1972 with an idea, a new concept in distribution. Today, Digi-Key Corporation is one of the fastest-growing electronic component distributors in the World. The stimulus for this growth is Digi-Key's customer-centered business philosophy… Read More

Lunney Advisory Group

Lunney Advisory Group was founded in 2007. Our firm is not your typical consulting company. Some members of our firm are highly qualified and experienced industry executives/practitioners while others are full time or adjunct university professors.… Read More


Webcasts

What CEOs Expect Of Purchasing

Guest Contributor

Procurement and supply management leaders have a seat at the table, and management’s expectations are high. But what do CEOs really want, and is purchasing delivering on these expectations? This webcast looks at how procurement and supply management … Read More

Growing Purchasing Influence On Indirect Spending

Guest Contributor

At world-class companies, purchasing’s influence touches just about every area of spending. But, how exactly do procurement teams get to the point where other departments approach them for help with sourcing such indirect categories as human resource… Read More

Procurement-Finance Collaboration

Guest Contributor

Procurement & finance are two business functions which are often at loggerheads with each other. One reason for this is the lack of perception alignment on an important metric of procurement and finance performance - 'savings'. Read More