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Corporate (Group) Supplier AnalysisView Template for: Corporate (Group) Supplier Analysis Almost all companies understand the pressure of customers bargaining down prices and demanding better service. From the opposite side of the table, not all companies systematically review the quality and pricing of their suppliers. There are numerous reasons why many companies don't pressure their suppliers. Some companies are too profitable and haven't felt the need; some believe it's unprofessional or beneath them; and others don't negotiate with suppliers because it was never part of the corporate culture. A first step for those companies not accustomed to systematically reviewing vendors is to request (from the accounts payable department) a report of the top 100 vendors used by your company. The report should list vendors in descending order of amount paid. The report is an attention grabber. In many cases, just asking the vendor for a discount, especially when armed with a proposal from an alternative supplier, will result in price concessions. For example, bank operating fees and expenses have been falling for years, and there is a tremendous amount of over capacity in the banking system. Bank customers who have not switched banks in many years often pay higher fees than do new corporate customers who bargain down prices. It's possible (though not guaranteed) that if your company requests a 10% price reduction you may just get the reduction for the asking (especially if you indicate that without the reduction you will initiate a request for proposal from other banks to help streamline your banking costs). Negotiating with vendors is often a fast, easy, and meaningful way to improve
profitability. Most strategic moves take a year or more to pay off. Using your
buyer power often brings results in months. The key, however, is to carefully
evaluate how dependent your company is on a particular vendor and to increase
your buyer power by having alternative suppliers available who can match or
outperform that vendor. |
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