 | ||
| ||
|
Definition of Negotiation "reaching the most satisfactory outcome for ALL concerned" |
|
|
Suppliers as Your Partners in Cost Reduction
This article is one of the many articles still to come in which I will discuss very basic yet proven techniques that you could use immediately in your encounters with your suppliers. Oh but wait, to find any value in this article, you must be a firm believer that Purchasing strategies have evolved from just 1) focusing on price and 2) focusing on quality, reliability, responsiveness and total cost to a much broader focus of building supplier relationships. Did you know that for each $1.00 you save in your "total cost of ownership" reduction efforts, you will improve your bottom line profitability by $1.00? And did you also know that most companies do not get this concept and continue focusing their resources in all the wrong places? Now is the time when I want to share with you 4 basic rules that have proven to work and work very well to help you create the partnership relationship with your supplier and allow them to equally benefit from the experience as well. Rule #1: Getting direct cost savings is really a thing in the past. Getting savings has become increasingly difficult to achieve as your suppliers face similar predicaments themselves and operate with very little room in their margins to wiggle. Rule #2: To affect your bottom line, using 80/20 rule, work on reasonable incentives to approach your top 20 suppliers with and build a "preferred" supplier base. Rule #3: Communicate to your suppliers on "how to" earn a "preferred" supplier status and what is required of them to remain a "preferred" supplier. Rule #4: Tell your suppliers what's in it for them (WIIFT) as they partner with you and build a "preferred" relationship. To earn a "preferred" status means that your supplier will have the first shot to quote on new business, parts and project. In fact you can go so far as to create "earn a point" program every time you achieve your cost reduction goals using these techniques as they apply to your business. Supplier earns a previously agreed upon point(s) when: 1) Shared tooling costs or shared engineering costs on a project 2) Extended terms: 60 or 90 day billing terms for a period of one year 3) Certified as "ship to stock" on all supplied parts or assemblies for a period of one year and remain compliant for every year thereafter 4) Ship zero defects for a period of one year and continue as such for every year thereafter 5) Work with purchasing, manufacturing or engineering to add value Working with your suppliers to explore these techniques not only presents opportunities for you to reduce your "total cost of ownership" but also helps your suppliers to review, improve and streamline their processes and grow internally to be able to meet your expectations and earn that "preferred" supplier status. Use this "total supply chain cost" model as your guide to isolate and focus on the actual cost elements impacting your bottom line profitability. Total supply chain cost= Buying price= +Supplier performance cost +Cost of acquisition +Out-of-sync planning -Speculation returns +Speculation cost +Mfg. cost +Selling cost +Distribution cost +Profit =Selling price Vera Haitayan, Principal Consultant of The Leadership Laboratory., a California-based employee development and process improvement consulting firm and is the senior editor of The Stepping Stone Newsletter featuring leadership and process improvement best practices.http://www.1leadershiplab.commailto: vera@1leadershiplab.com
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
So Whats Your Argument? Arguments aren't always bad things. Sometimes They're used to convince someone of an important point they may not yet realize. How To Communicate Using Space What Is Proxemics?The study of the communicative aspects of personal space and territory is called proxemics. Everyone is surrounded by an invisible zone of psychological comfort that follows us everywhere we travel. Cross Cultural Negotiations Cross cultural negotiation is one of many specialized areas within the wider field of cross cultural communications. By taking cross cultural negotiation training, negotiators and sales personnel give themselves an advantage over competitors. Where to FIND the BEST Employees -- Obviously, you might logically say, "that is good!" You would most certainly be on track feeling good about everyone in your area having a job. Getting everyone working and being more self-sufficient is our logical goal. Negotiation: A Compromising Position Negotiating is a hot topic these days for a good reason. It is difficult to imagine a more vital managerial skill than the skill of negotiating. Negotiating Technology Contracts Have you ever tried to negotiate a deal for software, computer equipment, or consulting services with a technology company? The task can be daunting. Unfortunately, the sales forces of most IT companies are armed to the hilt with techniques to get the best deal for them, and not necessarily the best deal for you. Negotiate Your Way to a Better Salary 1. Be persuasive: It's hard to force your boss to increase your compensation, and trying to do so can potentially damage your working relationship. Power Pricing - Getting the Right Price for Your Products and Services There's an old joke about the New York City blackout. Power was out everywhere, and the electric company couldn't figure out what was wrong or how to fix it. Negotiating Skills Will Get You Ahead Negotiating skills can help you manage lots of different kinds of life situations, both at work and in your personal relationships. Here are a few examples of where these skills can help you build an even better life for yourself:1. Neogtiation: How to be Right Without Making Other People Wrong What exactly are we trying to accomplish by proving to others that we're right? We might win the argument but ultimately lose the relationship. Perhaps a better, deeper-rooted question is this: Why do we lose sight of success, of our big objective, when we feel challenged or intimidated?When I prepare to negotiate, provide a service or turn my employees' talent into performance, I know deep down that if I make people feel valuable they will see my input as having value. Do You Want a Paycheck or a Passion? 10 Qualities Managers are Looking for in Hiring You Based upon my research of over 300 managers in the last two years, I have found what qualities are most important to hiring managers.You will be in a more competitive advantage if you do a self-assessment to determine if you possess these qualities. Resolve Conflict In 6 Easy Steps - The BEDROL Method The principles of Negotiation can work for you in any situation, but often people ask me, "Well, its often a fact that conflict happens unexpectedly. What if I don't have time to prepare? Can negotiation skills be used on the spur of the moment?" The answer is YES. Better Internal Proposals A colleague of mine has a problem. We belong to the same association and he's been trying for quite some time, without success, to get support for one of his proposals. Four Ways To Work Out Business Disputes Business owners have four options to resolve disputes with partners, vendors or customers. Each option is based on different assumptions, and entails a different cost. A One Stop Financial Solution Amy Wright, 34, was extatic when her realtor showed her the three bedroom townhome overlooking the lushious golf course. It was exactly the home she was looking for. The Six Rs for Changing MInds and Overcoming Resistance This article borrows from Howard Gardner's book, "Changing Minds" (2004). In order to get people in conflict to cooperate or collaborate sufficiently to settle or resolve their differences, and perhaps achieve reconciliation, it is necessary that they change their minds. The Art of Negotiation in 535 words I want to get better at negotiation, but where to start? UK Amazon currently has 2332 books on negotiation. Google indexed nearly 4 million relevant (yeah right) pages. Guidelines for Ambassador Appointments Ambassadors to other countries are a vital part of international relations. It is not uncommon for an ambassador to be the face or image of one country to another. While Youre Waiting Not long ago, I made a partnership pitch, on behalf of an organization I represent, to another organization with similar interests. If the idea had come to fruition, it would have radically changed our organization. National and Cultural Negotiation Style Cultural and national negotiation styles reflect communication behaviors and the priorities of that culture. Priorities such as trust, teamwork, non-confrontational situations, and openness are all along a sliding scale with each culture.
|
|
Home | Site Map | Disclaimer | Privacy Policy | CCL WebServices |
| © Career Consulting Limited 2010 |