Purchasing

Richard G. Weissman

You Know....Price Does Matter
February 19, 2008

Editor's Note: The following post is in response to the article:  Vendor Management: Price Doesn't Matter in CIO Magazine.

Dear Stephen:
 
I read with interest your recent article, Vendor Management: Price Doesn't Matter, on CIO.com.  I was especially drawn to your comment that 'procurement organizations have perpetuated a myopic, lowest-cost mentality that has turned off their internal customers'. When I read further and saw that you refer to 'squeezing vendors', I assumed that you were a sales and marketing type that was trying to demean the purchasing profession in one broad scope. I was honestly surprised to see you were a purchasing pro.
 
I certainly agree with your message of total cost of ownership. I wish more organizations embraced that philosophy. I also agree with your concept of strong supplier relationships. I am an advocate of balanced relationships, but we can mince words at a later date. And yes, strong customer service to internal customers is important.  Trust and commitment? Certainly a two way street.
 
But I think you are missing the point when you castigate the purchasing profession for their lack of understanding.. My dealing with today's supply management professional shows me that they fundamentally understand that concepts of total cost ands supplier relationships. What prevents them from effectively doing their job is the attitude, or lack of understanding, of their management of these critical areas. In some organizations it really does come down to price and the supply management staff needs to respond accordingly.
 
Companies are fighting the good fight when it comes to competing on a global stage. I can speak about the concept of value until I am blue in the face, but I also need to understand the issues of how that value translates to a balance sheet and income statement. Sometimes it just doesn't. When the price and value equations balance, I am happy. In some cases, though, price does matter. That's just the way it is.
 
Respectfully,
 
Rich Weissman

Posted by Richard G. Weissman on February 19, 2008 | Comments (0)