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…
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…
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…
According to the World Economic Forum, “Many global manufacturing OEMs have been struggling to find alternative solutions, like shifting orders to secondary suppliers to make up the missed deliveries”, the U.S. in particular sees Mexico as the perfect location for opening more and more production facilities with shorter delivery routes. In the pursue of finding…
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…
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…
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…
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…
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…
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…
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…
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 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,…
Purchasing teams have endured a constant state of crisis since Covid 19 shut down most manufacturing in early 2020. Material shortages and seemingly endless price increases have interrupted nearly any strategic focus as teams have been overwhelmed with “chasing parts” and fighting off supplier price increases to the best of their abilities. Now that the…
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…
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…
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…
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…
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…
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…
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 global economy is undergoing a Digital Transformation at record pace. Decliningcosts in bandwidth, storage and computing enable organizations to optimize, connectand model data to improve decision making and to drive results. Whatever the experts call it: Industry 4.0, Digital Economy, Internet of Things,Harnessing the Power of Artificial Intelligence and Machine Learning – its potential…
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 – 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…
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…
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…
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…
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…
At APD, we’ve learned that details matter when you are conducting a search for new suppliers of direct materials. Starting a search without having consensus on what you are looking for is a recipe for wasted effort and prolonged search times. So what are the details that matter? Capabilities First and foremost, manufacturers need to…
There is a common mistaken belief that Lemmings hurl themselves off of cliffs in an act of mass suicide to control their population. Actually, the Lemmings are participating in a mass migration. The fortunate land in the water and complete their migration; the unfortunate land on the rocks below. Similar to Lemmings, manufacturers have participated…
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…