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Supplier AnalysisView Template for: Supplier Analysis This section focuses on the suppliers of the business unit. Monitoring suppliers should be viewed as a key activity. Exercising your own buyer power can often improve profitability quickly. The degree to which companies exercise buyer power varies widely. At a minimum, every business should analyze their top ten suppliers. In each case, evaluate potential alternatives and consider ways to bargain down prices and/or improve the product (or service) purchased. Especially given the volatility of today's business climate, many vendors will lower their prices when asked. Technological changes have given rise to over capacity in many industries. From the point of view of many vendors, their marginal cost for keeping a customer is very low. In addition, many sales representatives are paid on commission of total sales and their fear of losing the whole account makes negotiating more rewarding. In practice, especially for large corporations, at least one person should be responsible for tracking the top 10 vendors. There is no reason for a company not to act as a smart shopper. In some industries, the idea of not monitoring all major vendors is absurd. In some industries, particularly in financial services, the concept is often talked about, but not always applied. Depending on the margins of the business, a dollar saved in expenses is often more valuable than selling an additional two dollars in products (or services). |
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