Harnessing Behavioral Science for Successful Negotiations

Negotiation is an essential skill in business and life. It’s about finding common ground, reaching agreements, and building strong relationships. Last week we had a webinar where I interviewed Mike Wynn, APD’s lead for Sourcing Optimization, about the application of behavioral science to commercial negotiations. Prior to joining APD, Mike trained sales professionals on the…

Maximizing the ROI from Purchasing Skills Training

“Companies don’t invest in training for the education – they invest to get a return”, someone told me that 30 years ago.   This insight, shared with me three decades ago, holds even greater significance today, particularly for purchasing departments. The role of purchasing in determining profitability is unparalleled, placing them at a distinctive position within…

Negotiating in a Global Purchasing Environment 

Negotiating in a global purchasing environment can be rewarding but also prevents challenges if you are not aware of different global negotiating practices. When working with different cultures, customs, and business practices, it is important to adapt negotiation strategies to drive successful outcomes.   Here are some tips APD recommends that will help you navigate the…

The current impact of nearshoring on suppliers in Mexico 

Nearshoring is a trend that consists of companies moving their operations to nearby countries, instead of doing it to distant countries. Mexico is one of the most attractive countries for nearshoring, thanks to its geographical location, its skilled workforce and its low costs.  In recent years, according to Economy Department of Mexico, Mexico has experienced…

Elevate Your Business Negotiation Prowess 

Negotiating is an important skill for everyone in business, but it’s an essential skill for buyers, purchasing managers, and business leaders.  Skills such as preparing for a negotiation, active listening, and applying the right negotiation tactics for the situation are fundamental to basic success.   Skills that give negotiators an advantage are more advanced – the…

2023 Cost Savings Opportunities 

We recently organized an Executive Roundtable where manufacturing purchasing leaders and c-level executives came together to discuss potential cost saving opportunities. The event was highly insightful, with over a dozen participants from diverse industries sharing their successful (and unsuccessful) cost saving implementation experiences in the current business environment. Additionally, APD presented four real client projects…

Why Understanding and Using Cost Models Drives Successful Outcomes 

Cost models can play a crucial role in driving successful outcomes for purchasing departments. Used effectively, they help drive optimal design, reduce the time required to bring products to market, and help companies succeed. Here’s how cost models contribute to achieving favorable outcomes in purchasing: Supplier selection: Cost models enable purchasing professionals to evaluate potential…

The Power of Strong Supplier Relationships in Nearshoring and Sourcing Opportunities 

In the face of global challenges, such as supply chain disruptions and shifting market dynamics, manufacturing OEMs are seeking alternative solutions to meet their production demands. One country that has emerged as an attractive option for opening production facilities with shorter delivery routes is Mexico. In this blog, we will explore the significance of strong…

3 Crucial Stakeholder Questions

Identifying and delivering on the needs of stakeholders is an important element in any successful strategic sourcing project.  Without appropriate stakeholder input, you’ll be left to guess at what exactly is required for a supplier to meet the needs of your internal customers.  Unintended consequences are likely, and can erode the value that your project…

Navigating Purchasing 4.0: Your Path to Success in Digital Transformation

Cutting edge purchasing organizations are embracing a digital transformation to leverage technology for smarter decision-making and improved results. This transformation, known as Purchasing 4.0, empowers purchasing organizations to optimize costs, connect with optimal suppliers, and ensure optimal quality levels. In this article, we will explore the key factors that will help you succeed in the…

7 Tips to Get Back to Important Work on Commodity Management 

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…

Time to Take a Closer Look at Indirect Savings

A Buyer’s Market for Indirect? This month’s Manufacturing ISM report brings good news for North American buyers of indirect spend. Corrugate, pallets, and freight are all listed in the Commodities Down in Price, with no indirect commodities listed in the Commodities Up in Price or the Commodities in Short Supply listings. This aligns with our…

Avoiding the 7 Deadly Sins of Outsourcing

Jerome Barthelemy’s 2003 article in Academy of Management identified 7 deadly sins that underlie most failed outsourcing efforts. While all seven are important, and you should carefully plan to have the countermeasures outlined below in place for any strategic sourcing initiative, some of the “sins” are much more impactful than others. The author surveyed nearly…

Say Good-bye to Should-be Costs and Hello to Predictive Pricing 

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…

Achieving Cost Savings in the 3rd Year of Covid

2023 started off with Covid once again impacting the daily routines of many.  Time will tell how badly manufacturing and logistics will continue to be affected and how much of a delay this will add to supply chain recovery.     Purchasing organizations have been consumed by the urgent demands of ensuring supply to keep factories running. …

Strategic Sourcing that Delivers Results

Sometimes smart people ask really smart questions. Recently, a Sr. Purchasing Director at a $3.5B manufacturer asked what we consider to be the most important factor for strategic sourcing projects. After careful consideration, we believe that there are three critical factors for success in strategic sourcing projects that deliver results. First, here’s our definition of…

Playbook for Reversing Economic Price Adjustments

For the past three years, buyers have been inundated with negotiating and settling supplier requests for price increases. The combined breadth (cost areas impacted) and percentage increases are higher than I can remember in my almost 40 years in purchasing. You must go back to the 1970’s to see inflationary pressures that buyers have been…

Finding Untapped Savings Opportunities

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…

The First Step for Negotiating Better Resin Prices

Buying resins is tough. Purchasing teams have too little information about the resins they buy and the supply markets available to them, while sellers have substantial sources of leverage. Consider these realities: It can be very difficult to implement alternative materials for a particular resin. Alternatives are both challenging to identify and can be extremely…

5 Critical Mistakes When Restructuring the  Supply Base 

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…

5 Steps to Cost Success

Purchasing success cannot be achieved by purchasing organizations or individual buyers without cost success. But what is cost success?  One of the best purchasing leaders in the manufacturing industry explained it to us this way:  “The best purchasing organizations and buyers can answer these questions:  What does it cost?  What should it cost?  What is…

Top 3 Challenges for Finding Mexican Suppliers in 2023

Finding capable suppliers is always a challenge, whether you are focusing on local, regional, or low-cost country suppliers. In addition to reliable supply and competitive pricing, you have to do your homework to vet potential supplier attributes such as: Do they have the right manufacturing processes and experience with the materials you require? Are their…

Recovering from unprecedented price increases – 4 tips for using a commodity-by-commodity approach

Have you experienced unprecedented upward pricing pressure over the past 3 years?   Purchasing leaders are telling us that they are under increasing pressure to increase cost savings efforts and results.  This has been a challenge to say the least, with unrelenting price increases for the last 3 years.   When working with clients on engagements, we are finding that a commodity-by-commodity…

Getting Past the Hard No in Negotiations 

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…

Strategic Sourcing Corrugated Packaging

There’s never been a better time to “kick the tires” on your corrugated packaging spend. Prices are dropping for the first time in two years as global box demand finally weakens after the severe post-pandemic run-up. Corrugated packaging buyers that don’t have index-based pricing agreements with supplier have two options: hope their box suppliers provide…

Still an Optimal Time to Take Advantage of Supplier Nearshoring

Currently in China, “Zero COVID” policies continue to be implemented that imply extensive confinements. According to The Inter-American Development Bank (IDB), there are estimates that suggest around 79% of US manufacturing companies in China have already started or have plans to relocate part of their operations to North America and Mexico. A big wave of…

What’s Your 2023 Savings Plan?

It appears we are finally transitioning from a prolonged period of supply constraints and rapidly rising prices to a more “normal” state. Supply-demand dynamics will vary by commodity, and the possibility of a global recession still looms, but after several years of chasing parts and battling price increases, purchasing teams are poised to return to…

Resin Prices Finally Softening

Every resin grade has its own price movements. Feedstock costs, supply availability, and demand drivers are unique to each material. That being said, the general trend is that prices for most resins are starting to soften – but are still well above pre-covid levels. The graphic below illustrates the 3-year price increases for 8 resin…

5 Ways Cost Models Help Companies Succeed 

Cost models provide companies 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.  Coupled with advanced analytics they can be used to predict supplier pricing.  Jeoff Burris started Advanced Purchasing Dynamics in 2004 to help companies with collaborative,…

5 Tips for Understanding Costs Better 

Purchasing success cannot be achieved by Purchasing organizations or individual Buyers without understanding costs. But what does it mean to understand costs and how can you expand your costing skills?  One of the best Purchasing leaders in the manufacturing industry explained understanding costs to us this way:  “The best purchasing organizations and buyers can answer…

Are Suppliers Ready to Compete for Your Business?

Is it time for North American purchasing teams to refocus on strategic sourcing? After staggering material shortages and unheard of ocean freight costs, purchasing teams are seeing glimmers of light that suppliers might be ready to compete for business once again. There’s a lot of evidence that supply markets for many commodities are beginning to…

Outlook for Corrugated Packaging

APD recently delivered a webinar on Reducing Corrugated Packaging Costs in which we discussed the current state of supply and demand dynamics and shared what companies can do to optimize costs in the current environment. This post highlights some of interesting information shared. You can download the on-demand webinar recording here. Corrugated packaging costs have…

Is It Time to Optimize Your Cardboard Packaging Buy?

It’s been a rough time to be a buyer of cardboard packaging. Corrugated paperboard prices have been rising rapidly – up nearly 40% in past 20 months. Cardboard supply lead times have been painful, with some suppliers selectively firing customers to ensure they can fulfill their most profitable orders. And demand is expected to continue…

Are there Capable Machining Suppliers with Capacity in North America?

Nearshoring is becoming an important initiative for global manufacturing companies that haven’t already established a strong North American supply base. It’s making more sense to “make where you sell and buy where you make” given ongoing freight challenges and shifting economics (mainly labor costs and exchange rates) that have made sourcing to Asia a less…

Go Bionic

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…

Tips to Becoming Your Customer’s Favorite Supplier

The connected world has opened opportunities for customers to find just about any type of supplier to fulfill their needs.  Systems like Linkedin even allow suppliers to find you – I don’t know about you, but on a typical day I receive 2-3 Linkedin connection requests from suppliers touting their manufacturing capabilities from all around…

Manufacturers Intensify Sourcing from Mexican Suppliers

In recent days, we’ve had several conversations with manufacturing business leaders focusing on the potential crises looming in both Asia and Europe, potentially affecting their suppliers. They are concerned that intense Chinese military drills in the area surrounding Taiwan and Russia’s slashing of natural gas supplies to Europe are going to impact suppliers’ ability to…

Does Purchasing Have a Seat at the Big Table?

Approximately 70% of all manufacturing companies’ revenue is spent with third party suppliers.  The importance of the strategic management of that spend, across the entire purchasing lifecycle, cannot be overstated in terms of its impact on an organization’s financial success. But despite that imperative, do we, as purchasing leaders and professionals, have a seat at…

Why Purchasing Departments are Choosing to Evolve Digital Transformation in 2022

Purchasing Departments are accelerating Digital Transformation efforts in 2022 to escape the pitfalls of conducting business with excel, eliminate the clutter, organize their data, and ultimately become more efficient.  Given the last 2 years with COVID, Digital Transformation in purchasing has become an essential hot topic, however in 2022 there’s a new twist:  Purchasing Departments…