Reviewing your Supply Chain Costs
Never before has it been so important to take control of your costs. Now is an ideal time to review and simplify your supplier base in the light of the new normal.
Supply chain and procurement specialists and Taunton Chamber members Auditel, and have provided the following tips you should be considering regarding your current and future supply chain requirements.
- Evaluate your current supplier relationships:
- Does the current service you receive meet the revised needs of your business?
- What is the status of your current supply contracts? i.e. When are they due, what termination terms are in place?
- What is the status of your suppliers now? Will they have difficulty supplying you now or in the future?
- Is the service being offered value for money – i.e. not necessarily cheaper, are their hidden administration costs due to poor service?
- Go to market :
- Now could be the best time to revisit the market and start to renegotiate contracts or arrange extensions. In some markets, costs are it a historic low and you may be able to capitalise on this by extending current contracts or putting new contracts in place
- Anticipate credit restrictions which may be placed on your business and seek support from government funding and other finance initiatives to help protect yourselves and re-assure the supply chain [this could be a call to action to the Taunton Chamber resources or to Milsted Langston who have very recently offered step by step business recovery advice]
- Negotiate effectively :
- Ensure you are leveraging any new insights you have about your business . Ensure your give a clear specification of requirements to avoid risk premia being added to prices
- Separate negotiator and relationship ownership to remove subjective emotional conflicts
- Benchmark – ensure that you have a robust comparison process in place to assess offers properly
- Ask suppliers to be innovative to adapt to your changed circumstances. The cheapest deal is not always the best, consider post sales services that can add value such as consolidated billing, self-serve vs account management
- Understand the contracting options available i.e. are the payments terms suitable, are their hidden penalties for non-use of services or late payment, what are the termination options?
- Do you have the resource, time and expertise to negotiate effectively? If not consider an outsourced procurement solution.
For more information please contact
Auditel Procurement & Supply Chain Specialist
T 01823 429990 | M 07763 253072