As I speak with procurement colleagues, I consistently hear of corporate mandates to negotiate an across-the-board price reduction or change to payment terms with all suppliers. While companies will see some short term benefits from this behavior, it of course is not sustainable. By not differentiating based on supplier performance and innovation, the quality of the supplier base will ultimately be degraded. Also, because this approach tends to focus on price it can starve innovation that might more significantly reduce total cost I was asked by Tim Cummins at IACCM to speak on a panel along with Dan Mahlebashian, Chief Contracting Officer at General Motors and Tim McCarthy, Worldwide Director of Pricing and Contracts at Rockwell Automation on the subject of Renegotiation - The Silent Killer of Expected Results. The topic clearly resonated with the sourcing community and was subscribed to by an audience of over 400 representing a who's who of leading corporations. The prescription for procurement was clear: We must possess the courage to resist knee-jerk tactics and lead through strategy, prioritization and alignment, leavened with a touch of old fashioned ingenuity If anyone is attending SIG's Global Sourcing Summit this week in Baltimore, MD, I'll see you there. I'll be posting between presentations throughout the week.
Sourcer, Heal Thyself
By Bill Huber, Director, CPO Services, TPI
As I speak with procurement colleagues, I consistently hear of corporate mandates to negotiate an across-the-board price reduction or change to payment terms with all suppliers. While companies will see some short term benefits from this behavior, it of course is not sustainable. By not differentiating based on supplier performance and innovation, the quality of the supplier base will ultimately be degraded. Also, because this approach tends to focus on price it can starve innovation that might more significantly reduce total cost I was asked by Tim Cummins at IACCM to speak on a panel along with Dan Mahlebashian, Chief Contracting Officer at General Motors and Tim McCarthy, Worldwide Director of Pricing and Contracts at Rockwell Automation on the subject of Renegotiation - The Silent Killer of Expected Results. The topic clearly resonated with the sourcing community and was subscribed to by an audience of over 400 representing a who's who of leading corporations. The prescription for procurement was clear: We must possess the courage to resist knee-jerk tactics and lead through strategy, prioritization and alignment, leavened with a touch of old fashioned ingenuity If anyone is attending SIG's Global Sourcing Summit this week in Baltimore, MD, I'll see you there. I'll be posting between presentations throughout the week.
As I speak with procurement colleagues, I consistently hear of corporate mandates to negotiate an across-the-board price reduction or change to payment terms with all suppliers. While companies will see some short term benefits from this behavior, it of course is not sustainable. By not differentiating based on supplier performance and innovation, the quality of the supplier base will ultimately be degraded. Also, because this approach tends to focus on price it can starve innovation that might more significantly reduce total cost I was asked by Tim Cummins at IACCM to speak on a panel along with Dan Mahlebashian, Chief Contracting Officer at General Motors and Tim McCarthy, Worldwide Director of Pricing and Contracts at Rockwell Automation on the subject of Renegotiation - The Silent Killer of Expected Results. The topic clearly resonated with the sourcing community and was subscribed to by an audience of over 400 representing a who's who of leading corporations. The prescription for procurement was clear: We must possess the courage to resist knee-jerk tactics and lead through strategy, prioritization and alignment, leavened with a touch of old fashioned ingenuity If anyone is attending SIG's Global Sourcing Summit this week in Baltimore, MD, I'll see you there. I'll be posting between presentations throughout the week.
