[The Jolt] 4 strategies for buying in a depressed economy
Published: Apr 28, 2009
Global - Early economic indicators have cautioned buyers that they are entering a deflationary period, but many are still caught unawares. Buyers can still up their game and beat the downturn if they consider these four key buying strategies, says a top Zycus executive.
#1: Just Ask
In a deflationary environment, the price of many goods and services are going down and organisations can only benefit from this opportunity if they only ask, says Aatish Dedhia, CEO of Zycus. Buyers should ask for a lower price at any stage of the procurement lifecycle. "However, asking during a contract may have ethical implications, so you should proceed with caution, for example only initiating this request only when there has been a steep drop in contracted prices," he says.
#2: Ask across all categories
Because deflation affects all categories, Zycus believes buyers should do a quick analysis of spend and begin targeting as many categories as possible. One thing to keep in mind is that often the savings in some indirect categories can be as significant as some direct categories, but because prices have fallen so dramatically and in this environment, every million dollar saved helps.
#3: Don't be shy to ask prices through a reverse auction
Many buyers hesitate to ask for pricing on reverse auctions because of the perceived alienation of some suppliers, especially the incumbent ones. "If you view the reverse auction as a price discovery tool, and relinquish using predatory tactics such as proxy bidding, it can provide great benefits without alienating suppliers," the executive believes.
#4: Have intense activity. Savings are there for the picking
In the current environment, bottom lines, if positioned correctly, can propel the procurement community into a very visible and strategic role within the organisation's boardroom, and buyers are encouraged to leverage on this added visibility. "This is an opportunity for the procurement community to take intense action and execute as many savings projects as possible," he says.