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Index >> Procurement Strategy >> How Sellers Rate You

How Sellers Rate You
by Richard Pinhorn

All sellers have discretion.  Who gets the new product first?  Which customers can we offer special terms to?  Who gets the manuals free and who will have to pay for everything?

Suppliers exercise their discretion based upon the attractiveness of their account.  Attractiveness is a composite measure of a number of factors including:

1.  opportunities for Revenue Growth
Q. When would a supplier deliberately incur negative cash flow?  A. When there is a prospect of positive cash flow at some stage in the future!  So if you are one part of a larger business, you may have more attraction than ifyou stand alone as a unit.

2.  Strategic Fit with the Supplier
If a supplier has growth plans, targeting specfic sectors or geographical areas, it may be that your business is part of a planned compaign.  Alternatively, you may have core capabilites that the suppliers value and wish to enhance their own capability.  Access to intellectual property is an example.

3.  A Simple & Transparent Procurement Processes
Some customer's procurement processes are opaque, many are labyrinthine, with obscure rules and procedues.  Many suppliers do not respond to bids automatically, first making an assessment of the cost:benefit.  If you are in the "too hard" box, then they may not bid.

4.  Account Profitability
The focus on CRM by many suppliers means that they assess accounts in terms of profitability and not jest key accounts.  If your business has lots of volume but no margin, you may not be as attractive as your dollar scale might suggest.

5.  "Hassle" Factor
Many buyers seem to regard late payment of invoices as a badge of honour.  For suppliers, the hassle in dealing with some clients can turn a marginal client into an unattractive client.  How easy or tough are you to deal with?

6.  Kudos or Prestige
If your business has the sort of credibility that encourages suppliers to quote you as a reference site then the sheer prestige of association may make you attractive.

Clearly, if you understand your importance as an account to each supplier in the market, you can better understand the degree of "fit" between your procurement goals and their sales strategy.






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