TRANSPARENCY OR COMPETITION
Transparency or competition… what do you think is more important to optimize prices?
In my opinion they are equally important, meaning it’s a must to have both of them to optimize prices in the long term.
With transparency we analyse and define the best possible cost, our target price, defining potentials, driving supplier development projects and negotiations in a professional way. But transparency does not help to optimize price reduction without competition.
For instance: having cost transparency with a monopoly situation and a lot of ‘professional’ discussions, but no price reduction.
With competition we assure that several suppliers are able to get the business. But just having several available alternatives does not assure competitive prices without transparency.
For instance: sourcing from expensive supplier for years and moving on to another who is just slightly cheaper, but still far away from optimum cost and real market prices.
From my point of view, the key point is to use transparency to create real competition through a proper Material Group Strategy, ‘motivating’ the right suppliers to offer their best to achieve target prices.
How is it possible to optimize prices using transparency & creating real competition? By having exceptional professionals with deep knowledge about the market, expertise on supplier management, a strategic mind set and well-trained abilities in cost analysis.
But… what do you think?
If you are interested in investing in an exceptional team and increasing your company’s profitability, we encourage you to consider our next training focused on improving strategic purchasing skills. Additionally, please feel free to contact us for more information.
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