Tariffs, covid, shortages, war, and inflation. We have experienced over 5 years of chaos that have had purchasing professionals restructuring their supply chains. However, due to the unprecedented issues requiring immediate firefighting, sometimes shortcuts are taken and the restructuring results are not favorable. What mistakes are being made, and what are the lessons learned? We…
Cost negotiation becomes a very hot topic when commodity prices fluctuate greatly. In the last few years sales organizations led the negotiation charge as they sought price increases to offset steep increases in raw materials, labor, and indirect costs. Now, buyers are starting to initiate the negotiations as some commodity prices have fallen off their…
Purchasing organizations and individual buyers (I’ll refer to them as buyers) need to develop strategies to claw back price increases that were granted to suppliers in the past three years. An economist once said that the best solution for high prices is high prices. Meaning that high prices themselves would self-correct as market forces of…
During the past 3 years purchasing teams have been consumed with Urgent firefighting tasks requiring immediate attention. At the same time, we changed how we work going from in-the-office to work-from-home and then back to the office or a hybrid of the two. These factors have taken the focus away from Important activities like employee…
Cost models provide buyers with valuable benchmarks to validate supplier pricing. Used effectively, they help drive optimal design, reduce the time required to bring products to market and help companies succeed. When it comes to understanding supplier cost structures, I admit that I am biased. After all, understanding supplier cost structures was what started my…
I have been around cost estimates and should-be costs since 1984 when I joined Ford Motor Company with my newly minted MBA and partial head of hair (yes, it is all gone now). While should-be costing provided real insights into costs and pricing, I always found it to have some drawbacks: Many suppliers find the…
Having experienced unprecedented upward pricing pressure over the past 2 years, purchasing leaders are telling us that they are under increasing pressure to increase cost savings efforts and results. A commodity-by-commodity review of company spend can often turn up untapped, easily implementable savings. To start, take the time to write down the questions you should be asking about each commodity that…
Go Bionic – is the recommendation made to CEO’s the Boston Consulting Group’s (BCG) recently published book makes in its recently published book Profit from the Source1. BCG lays out some ideas for creating a bionic purchasing department combining technology/data and skilled and knowledgeable personal just as man and machine came together in The Six…
A few years ago, we published two white papers about Should Be Costing, The Road to Should Be Costing Part 1 and 2. In the papers we provide an overview of different (and easy) methods buyers can use to develop should cost models. Our Cost Management Certification provides the knowledge and tools to develop and…
A friend just sent me a link regarding the west coast dockworkers contract that expires in June. The expiration brings with it the risk of a strike or lockout which would close west coasts ports and add to an almost unbelievable string of chaotic events that have been impacting global supply chains. For the past…