- Founder and managing partner of YQ Purchasing, which specializes in creative procurement and in developing and applying new tools and techniques for supply chain professionals.
- CEO of YQ cvba, a procurement conglomerate of several plastic processing companies.
- CPO for deSter (part of the Gategroup) and held procurement or director positions for PepsiCo/Tropicana and The Cotton Group.
- Expertise spans pharmaceutical, mining, stainless steel, plastic processing, banking, glass, chemicals, beverages, FMCG and web development industries. Advises major multinationals like GlaxoSmithKline Vaccines in optimizing procurement operations.
- Selected by IPSERA 2010 conference in Finland for new and creative procurement approaches published in collaboration with the University of Hasselt. In 2013, IPSERA selected the YQ Matrix platform, developed in close collaboration with the Maastricht University, as being most innovative in the procurement world. Procurement Leaders 2014 selected the YQ Matrix as finalist for the Best Procurement Service Award in London.
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Purchasing and Procurement - How to Negotiate with Sole Suppliers
- Procurement professionals often are at a disadvantage when trying to negotiate prices.
Historically, procurement offices are understaffed in relation to the vendors with which they work. Procurement officers, for instance, work with large numbers of vendors while the vendors may build relationships with just a few buyers. This means that the sales representatives almost always have more time and are better prepared for a meeting than the procurement specialist. Vendors come with presentations filled with market intelligence because they have a lot of opportunities for discussion with their marketing departments, which the procurement department almost never has.
So, much of the challenge is not whether one can negotiate well, but what sort of information is available that can strengthen the negotiator's position. Even a bad negotiator with good information and good preparation can outperform a mainly good negotiator with poor knowledge. Good procurement officers can develop techniques for eliciting bits of market information from vendors over time.
- Procurement isn't just about prices; it also is about supply chain risk reduction.
Many companies have adopted just-in-time supply techniques as a way to drive down handling and distribution expenses. It works, but it also introduces some risk into the system. A problem with the supply chain can halt a production line because there typically is no backlog in onsite supplies.
Procurement professionals, who are under constant pressure to reduce input and handling costs, also must develop ways to assess vendor capabilities to make quick changes, provide products on short notice and deliver reliably.
- Supply contracts can introduce the necessity of negotiating with legal departments as well as sales representatives.
Contracts may not be the best solution in every supply relationship, but they are growing in frequency, particularly in the United States. U.S. companies tend to be more sensitive about locking in relationships by contract. The flip side, of course, is that suppliers also can use the contracts to cover themselves.
The answer is to find the right balance between intensely contracted and more casual relationships. Contracts can range from a list of agreed prices to complex relationships related to supply risk, delivery terms, packaging conditions, lead times and so on. At the upper end, contracts may call for vendors to provide dedicated analysis and assistance in production.
To be creative in negotiating such complex terms can require a level of legal knowledge to be certain that the legal terms in use in the contract are understood. This places an additional burden on procurement staff as it looks for opportunities to add value creation as well as price reduction to supplier relationships.
- Procurement negotiations can spill over into the marketing arena.
When vendors aren't able to lower the price of a product, negotiations may begin to look at other parts of – other budgets within – the vendor company. One key area is marketing. Procurement officers may find it necessary to be knowledgeable about marketing and to have an understanding of their own companies' marketing programs.
As part of the expected value creation, a procurement officer may begin the process of negotiating co-marketing agreements in which the two companies will work together to promote the buyer's products or services. This requires deep knowledge and strong relationships as companies will want to protect their reputations.
- Tracking procurement expenditures, especially for multinational firms, often requires data from incompatible systems.
It can be quite amazing that a lot of companies don't know how much they actually have spent on procurement. Particularly for the large companies with subsidiaries or overseas arms, they have completely different management systems that do not "talk" with each other. They are not able to effectively consolidate data.
In addition to clouding the spending picture, it can create inefficiencies because elements of the same company cannot compare prices paid or otherwise work together easily. One answer is to output the necessary data into standardized comma-separated values files that can help in the creation of formalized, spreadsheet tools for tracking and analyzing procurement data in a matter of a few seconds.