Purchasing

Mary Walker

Year-End Price Increases
January 2, 2008

In the days past, the inventory control and purchasing department were responsible for maintaining the cost of inventory items. You had to maintain this information for costing and for year end inventory. Most large companies of today have a costing department which maintains the cost in the computer system. Thankfully, buyers are no longer responsible for these updates in some companies. But regardless, the first of the year brings many updated price sheets from both major and minor suppliers.

Most companies identify their major suppliers as the ones that are the majority of their business. These are the companies that they negotiate price and delivery with. When a company has several hundred suppliers, does anyone track the price increases of the smaller companies? The companies that have a 5-6% increase yearly. Or is this just an acceptable mark up in costs? We all know materials and labor are continually increasing. Why is it that when we buy a house or car, the costs continue to rise, but when you go out to buy a computer or digital camera and the cost are continually decreasing? The first digital camera I purchased was around $750, now you can get the same camera for a little over a $100. 

That's where negotiating skills come into play. When polling the members of our ISM-Dallas affiliate, the most requested seminars are on negotiation. I remember my suppliers in the old Briggs-Weaver days hated to have to negotiate with our Director of Purchasing. He was a great negotiator. It was the days when people got loud, they banged on the table, and the conversations got pretty hot. Then you all went out to lunch, actually had alcoholic beverages, and were the best of friends. You could probably find some of this group out playing golf within the next week or two.   

Professional negotiators of today agree that planning ability, a high tolerance for ambiguity and a desire to achieve are the most important characteristics of a negotiator. Would you not agree that a desire to achieve is one of the most important elements in any area of the supply management field? The desire to achieve is what makes life interesting. This is what gets you out of bed every day.

Some of my family and friends feel that I am wasting my time in going to seminars, reading books on supply management and lately concentrating on how to just “talk”. I am not ready to accept my current abilities. I think we must always have the opportunity to improve our skills. If you don’t have the desire to achieve, you will just stand still.

Posted by Mary Walker on January 2, 2008 | Comments (1)