Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
Suppliers as Your Partners in Cost Reduction > NetSparsh - Viral Content you Love & Share

Suppliers as Your Partners in Cost Reduction

This article is one of the many articles still to come in which I will discuss very basic yet proven techniques that you could use immediately in your encounters with your suppliers.

Oh but wait, to find any value in this article, you must be a firm believer that Purchasing strategies have evolved from just 1) focusing on price and 2) focusing on quality, reliability, responsiveness and total cost to a much broader focus of building supplier relationships.

Did you know that for each $1.00 you save in your "total cost of ownership" reduction efforts, you will improve your bottom line profitability by $1.00? And did you also know that most companies do not get this concept and continue focusing their resources in all the wrong places?

Now is the time when I want to share with you 4 basic rules that have proven to work and work very well to help you create the partnership relationship with your supplier and allow them to equally benefit from the experience as well.

Rule #1: Getting direct cost savings is really a thing in the past. Getting savings has become increasingly difficult to achieve as your suppliers face similar predicaments themselves and operate with very little room in their margins to wiggle.

Rule #2: To affect your bottom line, using 80/20 rule, work on reasonable incentives to approach your top 20 suppliers with and build a "preferred" supplier base.

Rule #3: Communicate to your suppliers on "how to" earn a "preferred" supplier status and what is required of them to remain a "preferred" supplier.

Rule #4: Tell your suppliers what's in it for them (WIIFT) as they partner with you and build a "preferred" relationship.

To earn a "preferred" status means that your supplier will have the first shot to quote on new business, parts and project. In fact you can go so far as to create "earn a point" program every time you achieve your cost reduction goals using these techniques as they apply to your business.

Supplier earns a previously agreed upon point(s) when:

1) Shared tooling costs or shared engineering costs on a project

2) Extended terms: 60 or 90 day billing terms for a period of one year

3) Certified as "ship to stock" on all supplied parts or assemblies for a period of one year and remain compliant for every year thereafter

4) Ship zero defects for a period of one year and continue as such for every year thereafter

5) Work with purchasing, manufacturing or engineering to add value

Working with your suppliers to explore these techniques not only presents opportunities for you to reduce your "total cost of ownership" but also helps your suppliers to review, improve and streamline their processes and grow internally to be able to meet your expectations and earn that "preferred" supplier status.

Use this "total supply chain cost" model as your guide to isolate and focus on the actual cost elements impacting your bottom line profitability.

Total supply chain cost=

Buying price=

+Supplier performance cost

+Cost of acquisition

+Out-of-sync planning

-Speculation returns

+Speculation cost

+Mfg. cost

+Selling cost

+Distribution cost

+Profit

=Selling price

Vera Haitayan, Principal Consultant of The Leadership Laboratory., a California-based employee development and process improvement consulting firm and is the senior editor of The Stepping Stone Newsletter featuring leadership and process improvement best practices. http://www.1leadershiplab.com mailto: vera@1leadershiplab.com

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

New York Times

Grassley Extends Negotiation Deadline for Christine Blasey Ford
New York Times
WASHINGTON — After a tense night of legal brinkmanship, the chairman of the Senate Judiciary Committee late Friday told lawyers for the woman who has accused Judge Brett M. Kavanaugh of sexual assault that they can have until 2:30 p.m. Saturday to ...
Kavanaugh Accuser's Lawyers Propose Further Negotiation to Accept Testifying Next WeekBreitbart News
Kavanaugh's accuser accepts request to speak to Judiciary Committee next week, lawyers sayCNN
Supreme showdown to go down Thursday between Kavanaugh, Ford, sources sayYoungstown Vindicator
Bend Bulletin -New York Magazine -Twitter
all 18,221 news articles »

Los Angeles Times

Review: Sluggish South Korean crime drama 'The Negotiation' fails to create sparks
Los Angeles Times
Marked by its lack of intensity, the South Korean crime drama “The Negotiation” stars Son Ye-Jin as no-nonsense Seoul police inspector Ha Chae-youn, who specializes in defusing hostage situations, and Hyun Bin as charming arms dealer Min Tae-gu.


Harvard Business Review

Research: Simple Prompts Can Get Women to Negotiate More Like Men, and Vice Versa
Harvard Business Review
Do we lie to get what we want out of negotiations? That depends, according to forthcoming research I conducted with Jason Pierce of the University of North Carolina, Greensborough. We found that the likelihood of engaging in unethical behavior during ...


Farm Futures

US and Canada in 'continuous negotiation'
Farm Futures
U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland met Thursday in Washington, negotiating while a prominent Canadian union leader stood outside and sounded the alarm over deal-breaker issues. Thursday was ...
Malpica: Border Region will benefit from NAFTA 2.0Rio Grande Guardian

all 189 news articles »

Fast Company

All the things you're doing wrong in negotiations
Fast Company
Most of us think we know what matters most to the other party before we even sit down to negotiate, and that getting what we want comes at the expense of others. Based on these assumptions, the value we create for ourselves and other parties involved ...


New York Times

Christine Blasey Ford Opens Negotiations on Testimony Next Week
New York Times
The surprise offer was the latest twist in an on-again, off-again negotiation between Dr. Blasey and Senate Republicans, who have scheduled a hearing for Monday and set Friday as a deadline for Dr. Blasey to tell them whether she would attend. “She ...

and more »

United Steelworkers warns US Steel that negotiation time is running out: union
S&P Global Platts
Earlier in September, union members unanimously authorized a strike against US Steel if negotiations failed. A strike would require 48-hour notice to the steelmaker to insure a safe suspension of operations. "Time is running out. From day one, US Steel ...

and more »

Born2Invest

How to negotiate as if your life depended on it
Born2Invest
Rather he suggests renovating the art of negotiation to “never split the difference.” In his situations, splitting the difference meant losing lives. According to Voss, the only successful negotiation is when your counterpart believes giving you ...


Hiring process for Rantoul administrator still in negotiation phase
Champaign/Urbana News-Gazette
RANTOUL — The hiring of a new Rantoul village administrator remains "in the negotiation phase." The new hire would fill the position currently held by Rick Snider, whose contract runs through this month. "The (finalist for the post) and I have met. We ...


Fast Company

How to navigate four common negotiation roadblocks
Fast Company
Did you negotiate your last job offer? It's well-documented that many people simply don't try to negotiate, despite the fact that it can significantly boost your earnings over the course of your career. In a Glassdoor survey from 2016, 68% of women ...

Google News

The Art of Negotiation in 535 words

I want to get better at negotiation, but where to... Read More

Making the Deal: Women as Negotiators

Negotiating is no game. It is not for the weak... Read More

Guidelines for Ambassador Appointments

Ambassadors to other countries are a vital part of international... Read More

Negotiations: The Art, Science, & Sport of Online Deals

Negotiations can seem as complex as physics, and in fact,... Read More

Ask for More - You May Get More

If you are involved with sales, how do you feel... Read More

Do You Want a Paycheck or a Passion? 10 Qualities Managers are Looking for in Hiring You

Based upon my research of over 300 managers in the... Read More

Dont Be Afraid Of Silence

In any conversation with two or more people, there is... Read More

The Six Rs for Changing MInds and Overcoming Resistance

This article borrows from Howard Gardner's book, "Changing Minds" (2004).... Read More

7 Tips for Bartering Products and Services

What better way to gain a new customer than by... Read More

Negotiating Skills Will Get You Ahead

Negotiating skills can help you manage lots of different kinds... Read More

Embarrassed To Discuss Your Prices? Seven Common Reasons We Cant Talk About Them

Last week, a wonderfully-skilled electrician installed a new light fixture... Read More

Resolve Conflict In 6 Easy Steps - The BEDROL Method

The principles of Negotiation can work for you in any... Read More

Barter: Its Not Just for Doctors Anymore

Time was, in the country, the local "doc" was as... Read More

Four Ways To Work Out Business Disputes

Business owners have four options to resolve disputes with partners,... Read More

Just Ask!

Ask and you shall receive & knock and it shall... Read More

Negotiate to Your Advantage

The hardest and most important part of any negotiation is... Read More

How To Deal With A Complainer

How To Deal With A ComplainerA Complainer Is Characterized by:1.... Read More

Negotiating Tactics: How To Strike A Negotiable Opening Shot

There is no right or wrong to fire up your... Read More

Negotiate Like a P.R.O.

Whether you're negotiating a peace settlement in a war-torn country... Read More

The Most Powerful Persuasion Skill Youll Ever Learn

Criteria ElicitationThis is without a doubt the most important persuasion... Read More

Negotiating: Forcing vs Compromising

Forcing is a hard-nosed approach that makes heavy demands from... Read More

Are You Scaring Away Potential Customers?

When you are trying to make a sale and ask... Read More

While Youre Waiting

Not long ago, I made a partnership pitch, on behalf... Read More

Communicating Across Time Horizons

There was a time in my life when I sold... Read More

Managing Conflict, in Life & Work: Using Ancient and Modern Approaches

"Conflict" is a word that can have varying degrees of... Read More