The purchasing department is one of the largest cost centers in a company and, therefore, needs to be modernized so that, in addition to saving on purchases, it contributes to the company's competitiveness. In other words, reducing procurement costs in B2B means being more strategic and delivering more value to the business.
However, it is not possible to change this perception simply by conducting research among suppliers with the aim of reducing costs. It is necessary to think of new strategies to optimize processes:
Strengthen relationships with suppliers
The closer the relationship with the supplier, the better the payment and service terms offered at the time of negotiation. Although it is difficult to offer special terms to a customer who has purchased once, it is much easier in the case of large, recurring purchases. A consistent relationship with suppliers is essential to improving any negotiation, for both parties.
Changing suppliers all the time prevents you from building a good relationship, not to mention that your company will always be considered a “new customer”. Working together with your supplier can also be beneficial for both parties. Joining forces means achieving larger purchase volumes. The larger the order, the greater the chances of obtaining discounts and other special conditions.
Analyze the market
Knowing the average cost of a competitor's purchases is an important aspect of a company's business strategy. Comparing equivalent products also helps to understand whether the company's costs are in line with the market. It is an important check to have a complete understanding of purchasing conditions and even to learn about new trends in payment models and raw materials.
Negotiate prices and deadlines
Negotiating prices and payment terms is obviously a great way to cut costs. Quoting prices from suppliers of similar quality and asking for discounts on bulk purchases or long-term contracts also helps cut costs. If the supplier is willing to build or maintain a relationship with your company, they will likely offer lower prices or even match other offers. These negotiations should occur regularly, not just on the first purchase.
Negotiating different payment terms is also a way to reduce costs. Purchases that must be paid in a short period of time require more resources from the company and can disrupt financial planning.
Avoid urgent purchases
The more urgent the order, the higher the cost. The unpredictability of a situation means that suppliers will charge higher prices, simply because they know that the company needs it urgently. Even if the supplier doesn't change the price, the lack of planning can make the items less reliable and deadlines more difficult to meet.
Trust in technology
For many companies, conducting purchasing processes manually is counterproductive. Technology is therefore a great ally in dealing with this. An automated system keeps almost everything under control. Supplier registration and performance monitoring processes, for example, are extremely simplified. The use of disruptive technologies not only makes the process easier, but also more reliable.
COSTDRIVERS helps your company understand which negotiations are aligned with the market average, make projections and optimize negotiation time. Contact us and find out how we can contribute to the company's growth.
