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Commentary
The first best practice focuses on insuring that purchasing is sitting at the table from the identification of a need forward. Historically, users have thrown a requisition over the wall to purchasing. Often, identifying the desired supplier and even indicating the price! "Hey Purchasing, see if you can lower the price" is the message that accompanies the requisition.
Purchasing's ability to influence price is far greater if they are involved early on. First purchasing will ensure the environment remains competitive, often a challenge for our user community. Second, Purchasing will seek opportunities for identifying a broad array of suppliers and standardizing products. Finally, the greatest avenue for reducing costs is in the specification process. Once the requirements are locked in, only the supplier's margin is left to negotiate.
The auto manufacturers are the leaders in this area. Purchasing sits at the table 90+ percent of the time from when the need is first identified.
Don't forget services. This practice is just as powerful for acquiring legal, engineering, maintenance, and other services.
Best Practice | Case Study | Commentary
April 4, 2000
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