Purchasing problems result in:
One of the biggest mistakes a company can make is allocating resources to Vendors that don't move their company forward. Every time you purchase from a vendor you introduce risk, the larger the purchase the more risk. You are betting company resources on the purchase generating a successful outcome. Incorrect vendor management will consistently over time drive up your cost of revenue, or cost of goods sold.
This can impact KPI's:
Profits down, margins down, costs up, risk up.
That is why you want to know where the risk is located, which vendors you should be spending money on vs. which ones you should be sourcing to replace. We analyze all areas of your business where vendors are utilized, your spend on them, and most importantly their value to your company vision. From there you are able to set clear goals for your purchasers to source new vendors, renegotiate and determine which ones leadership should strengthening their relationships with.
Save money and reduce risk by understanding which vendors you should limit risk exposure from, and which help move your company vision forward.
Negotiating results in:
If you think about all the vendors you purchase from for advertising, legal, equipment, technology, materials, etc., it is extremely difficult to know if you have the best price, or discount. Only after time has passed, or conversations with other companies, do you find out if you have received the best price from a vendor. What makes this so difficult, is that companies would have to dedicate full-time employees to negotiate ever single detail of every agreement to get every discount possible. Business doesn't work like that though. This shows up as poorly negotiated existing contracts, and poorly negotiated new contracts.
This can impact your business:
Overspending (increased costs), taking on too much project risk, working capital down, Profits Down, Margins Down, Costs Up, and Risk Up. Definitely stress inducing.
To improve this situation, we take a different approach. We don't cover the negotiating stuff you see all over the internet, such as: know what you are willing to give up and ask for more than you want. Those techniques don't provide what is actually happening at a vendor company, during negotiations, to make a scalable difference in getting contracts to your favor. Instead of focusing on a particular strategy, we use the understanding we gain from the vendor analysis to see the how, and why, each vendor is resisting a more favorable discount. We then dive into ways companies structure discounts, and what we can do to gain access to those discounts. Next we determine the best candidates for renegotiating, and new negotiating strategies, giving you an incremental cost and risk reduction year over year.
Vendor negotiation helps you reduce cost and risk, while making the relationships you have with the vendors key to your success stronger. The money saved and lower risk can go directly to achieving your company vision.
With vendor analysis and vendor negotiation, we reduce cost of goods sold by understanding where and how to negotiate to your favor. This is measurable, this is vendor optimization.