Survey

What percentage of your purchase transactions are negotiated?

None
1% to 5%
6% to 20%
21% to 50%
51% to 99%
ALL 100%

Look At the Details, Too

Date: 04/01/2019

You need to look at the details as well as the big picture to know what is really going on in your purchasing operation. The grand totals will frequently tell you where there is a problem and what you need to work on, but the details will often reveal things that the big picture won’t tell you.
Whether you are measuring savings or expenses or delivery performance, averages are important to direct you where to take action, but big achievements can be achieved by looking at particular items closely. For example, the expenditure on office supplies, or maintenance items may be much higher than justified by the number of employees. A large expenditure for a particular item should raise a red flag and call for further investigation.
Categorizing products helps compare expenditures and directs you to where your efforts should yield the highest return. For example, learning how much you spend on corrugated or packaging material, electrical components, plastic parts, and sheet metal encourages you to work first on cost reduction where you spend the most.
You are likely to improve supplier performance if you keep records and take appropriate action where necessary about of delivery dates, quality rejections, and response time. Looking at the detailed records, you will learn which suppliers are consistently too early with their deliveries or too late. The averages alone will not tell you that. You need to compare each supplier’s record with the averages.
Keeping adequate records provides the information that will prove your case when you are discussing supplier failures. Salespeople often seem somewhat skeptical of claims if you don’t have actual statistics that confirm what you say.
Good records also help refute unjustified internal allegations of supplier failure. The buyer is more likely to gain respect from the suppliers when there is no false blame for supply problems.