Jeremy Ferrer
Webinar :
Cross-border Purchases and VAT: Optimization Strategies
Tuesday Sept. 10, 2024 at 11 am (France)
“The best buy is the one you don't make! ”.
This seems completely obvious, but experience shows that businesses regularly buy useless products or services!
We selected six purchasing levers to increase productivity, here they are:
Standardization is one of the six purchasing levers, it can take two main forms: either you adapt your needs to the standard offers on the market; or you buy only one product, which becomes your standard.
Buy market standards
It can be tempting for the prescriber to choose exactly the component that will fulfill the specific function requested by the customer.
It is your duty to check that said component corresponds to the products commonly sold by your supplier. If not, you increase the risks :
Read: Tactics for negotiating with suppliers
Buying fewer different components is undeniably a safe bet for control purchases. You will be vigilant on this point from the very beginning of development.
All the ERP systems on the market easily accept item creations. On the other hand, you will encounter the worst difficulties in deleting components from the database.
We recommend that you require your contacts to ask themselves all the necessary questions before creating a new article.
Set up a very restrictive procedure for creating new articles. This will be a first line of defence against the proliferation of useless items in the database.
Standardization is an indispensable discipline in order to activate the lever of massification as effectively as possible. The fewer different components you have to manage, the more volume you will have per component. You will then be able to play on volume distributions.
Massification is one of the purchasing levers, because it allows prices to fall through two mechanisms:
Discover: The buying group to improve your margins
Well-organized competition is also one of the purchasing levers, because it is necessarily a vector of competitiveness. The buyer is in a sense an arbitrator of competition. To do that, you need to have two concerns.
An organization for competition
Is your company organized to create a sufficient competitive climate?
It is very important to have this concern in the early stages of the buying process. Otherwise, you will have every chance of running up against the obstacles that the supplier in place will have put in the way of its competitors.
Maintaining a competitive climate
Establishing a “multisourcing” culture is a long-term task. It will sometimes be tempting for this or that prescriber to return to the incumbent supplier, once the supplier has made the effort to align itself with the competition. You will need a lot of ideas to insist and give a significant market share to the “challenger” supplier.
Read: Definition of e-Sourcing
It is not obvious at first glance that the Cost knowledge from your supplier is one of the purchasing levers, but it is indeed a vector of cost reduction.
This is consistently demonstrated by all professional buyers.
However, do not think that spontaneously, your supplier will provide you with all the information you need to break down the costs of the product purchased.
It is a long and patient work that you will therefore undertake as soon as possible. Every opportunity is a good time to gather information, to cross-check it, refine it, and to check it.
When, after a thorough hunt, you have obtained a good knowledge of the breakdown of costs, you can organize value analysis and develop plans for cost reduction.
consultancy
Do not hesitate to knock on the door of your management controller regularly. Knowing the breakdown of costs, their behaviors and their connections is his job. He will be happy to help you understand your supplier's cost structure.
To discover: How to map general purchases?
In Japan, we talk about” Kaizen ”. This approach, invented by Toyota engineers, is based on the premise that any process can be constantly improved.
The ISO 9001 standard has made it a requirement for any organization that uses this frame of reference.
Some economic sectors have become accustomed to including productivity clauses in contracts. The recent report by the mediator of industrial subcontracting, known as the Volot report, denounced this practice, which can be considered as an abuse of a dominant position. It is up to you to keep the idea and to contract it with your suppliers while respecting the principle of consensualism.
Even if competitive tendering is a reliable way to improve economic performances, she is not the only one. You can also increase the value provided by your suppliers by using collaborative working methods.
Innovating together, forming strategic alliances, and taking the risks of entering new markets together are all opportunities to create new economic values.
To download: Buyer Code of Conduct
Graduated from Grenoble School of Management.
Before founding Buy Made Easy, Olivier worked for 7 years in the Purchasing Department of General Electric, United Technologies and the SEB Group.
It is by sharing with operational staff and business leaders in France and Europe that the idea of offering a marketplace that is easy to use and exclusively dedicated to the expectations of professionals was born.
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