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 the plan to close the gap?” He was right…whether they are doing it consciously or not, almost all buyers and purchasing … [Read more...]

We have 15 years of data that shows that buyers who move from price-focused, competitive purchasing to cost/value-focused, collaborative purchasing can achieve savings of 8-18% (see figure). I wish we had a similar level of data on the career progression experienced by buyers who develop cost knowledge and utilize it in a collaborative way.   I think it would be revealing. It has been my experience that buyers who develop a deeper understanding of cost also increase their knowledge of … [Read more...]

Many resin prices hit bottom in April and May due to a combination of evaporating demand and steep price drops for oil in North America.  June and July have brought rebounds even though demand has not fully recovered, primarily because of increases in natural gas and oil prices, as well as growing demand for exports to recovering economies.   Opportunities to lock in savings exist with many resin grades, but the situation remains dynamic and opportunities vary widely.  One example is PP … [Read more...]

Plastics manufacturers are being hit by the simultaneous forces of supply interruptions, vastly changing demand, and volatile petroleum prices. So far, commodity polymer prices have slid slightly, but there are numerous opportunities to negotiate larger price reductions from resins suppliers if you know where to look. The key factors that determine if the specific resins you purchase are candidates for aggressive cost-downs are: Do you know which resins are more affected by Crude Oil … [Read more...]

I was the Chief Purchasing Officer of a company when the economy tanked, and the CEO told his senior staff of the requirement to cut headcount by a significant amount. Inside my head, I rejected the directive:  How could my team manage the supply chain disruption of a major recession, deliver our strategic plan, and reduce our headcount?   Outwardly, I raised no objections because those who did were facing stiff opposition. Instead, I waited and put a plan together detailing the actions … [Read more...]

This blog is the third of a three-part blog series designed as follows: How cost models help companies succeed The types of cost models buyers of manufactured products use How buyers can use cost models effectively Earlier this year, we surveyed over 30 sales and marketing professionals and CEOs at automotive suppliers to understand which types of cost models their customers were using and how they are using them. Their insights, added to our experience, provide interesting insights … [Read more...]