There's waste in your operating budget that can be recovered ...if you have information where to look and how to free it up. The waste is being caused by overpaying for equipment and services. From my patience, it's not fair-minded a couple of dollars either. My clients are shocked to look up they were wasting hundreds of tens (sometime millions) of hard dollars.
Although my expertise lies within one industry, the concepts we use to enhance the value you receive from a vendor works for any industry, product or duty. "Enhancing value" means lowering the hard dollar cost for creations or services while maintaining or improving vendor relevance support levels. When I initially meet with prospective clients, the theory of being able to reduce transcript, print and fax costs, while at the carbon counterfeit while improving vendor performance is frequently met with some leveled of skepticism. Statements are made undifferentiated: "we already have the first-class de! al achievable, or I have a decided relationship with my vendor, I cognize they are giving us the first-rate deal credible."
very, the only way to really be acquainted if you are receiving the unparalleled practicable value from your in vogue vendor(s) is to obtain several pricing and utility benchmarks (furthermore known as "circumstances points") to measure against your circulating costs and avail levels.
What Are Your Options?
At that mark in my initial discussion with prospective clients, I am occasionally asked "can't I strict renegotiate with my ongoing vendor(s)"? You can, but what will that really give out you? right ended your afoot vendor begets cost and/or relevance concessions, you will still not have any other proof points to evaluate the value you are receiving. I explain in another treatise titled "Why Partnering with Vendors Does Not stint" that the opposing motives you and your vendor have prevent you from getting the champion value, out! doors additional leg commission.
Sometimes I am told "I ! can issu e my own longing for Proposal (RFP) and lower my costs myself. that will ransom the cost of your fee." That statement is faithful, but the question to ask is; what is my true net return? To evaluate your true net return, you first have to determine the dollar amount you are unshakable that internal efforts can reduce your swinging hard dollar costs by.
Hopefully your procurement precinct has a record of their results from other similar projects. If you do not have an internal track record hatch abiding to evaluate the probability that their internal production estimates are realistic. What previous involvement in that restricted industry lends credibility to their estimates? synthesize unchanging you have an understanding of the aid levels being provided by your trendy vendor(s) and that you can accurately describe what aid criteria you crave moving forward.
You forth with yen for to look at the labor costs needed to acclimate yourself to the industry for t! hat project. Any industry is constantly changing to (hopefully) improve its by-commodities and services. From the last infinity your organization immersed itself in research of that industry, multiplied details have changed. You must allow while for your procurement team to update themselves on the industry and vendor pool, as well as implementing the RFP itself. An estimate of grooved one hundred labor hours is not uncommon for the average project.
Next, ask a performance-based consultant (for your target industry/cost area) what they believe your cost reduction abeyant is. Subtract their fee from the savings estimate and compare that to what you esteem you can achieve internally minus your internal project labor costs.
It will be crucial for you to determine how accurate the consultant's projections are. You have already evaluated how realistic your internal projections are. Now ask what verifiable track record does the consultant have to assure you the! ir cost reduction projection is accurate? Does the consultant! provide a written guarantee of their projected performance and/or do they have verifiable references? The champion performance guarantee is one that nail downs results and if the results are not delivered, the work fee is waived.
A bully performance-based consultant is similar in lousy with respects to a medical specialist. Unlike the general practitioner who requirements to have information a little about all of the human body, the specialist focuses on a poor area and is the unequivocal expert in that area. Your internal resources have to have a little about a lot of product/services that you purchase and use to operate your specialty. General practitioner observation will allow a comparison of bid responses and/or proposals, but it will not allow you to be schooled if you are receiving the finest value imaginable. The general practitioner will not have "industry insider" conclusions points that the specialist already knows and uses to ensure you receive the capital ho! peful value.
Find out if any of your internal resources have démodé inside the industry being evaluated, on the vendor side of the table, for at least five years. The first-rate previous obligation doing, to comfort your internal team's analysis, will be from those that have held positions in sales, executive management (CEO, COO, and CFO) or as a career sharer within your targeted industry.
Now complete a side-by-side comparison of the pros and cons, as well as projected results for implementing an RFP using internal resources versus using a cost reduction consultant. Is the project being evaluated the area where you can realize your highest ROI? It will not be in your incomparable interest to head down the path of an internal RFP if the net results (all cost considered) are better with an outsourced project or if that project would prevent you from completing another project with higher return.
It is standout to note that you will not have the luxu! ry of obtaining poop sheet points through a formal bid or gath! ering pr oposals and thereupon implement a project with a consultant. Vendors do have a limit before they blacklist your organization as not being a serious buyer. You essentially have one shot when engaging an industry to reevaluate your costs, so chart your happenings carefully.
At that particle in the process you can determine the true cost of the value enhancement project. Your choices are: 1) do everything, 2) implement the project internally and 3) engage a performance-based consultant. The true cost compares doing everything to your internal efforts minus labor costs with the amount that a performance-based consultant projects, minus their fee. Is there a cost for doing something? If not, move on your next highest expense type. If so, what is the outstanding continuity to take to maximize the value you receive from vendors?
In summary, we have discussed the key steps you must take to ensure you receive the finest snap value from your vendors. Look at your l! argest expense areas first and grind down through all the expense categories you feel are significant for your organization. The steps listed above will nest the corresponding, regardless of industry. You have to determine if your internal resources have the industry knowledge, track record, and labor resources to implement and complete a definitive "value enhancement" project.
After completing each of the steps outlined above and assessing the probable outcomes, you will have a reliable method to use to evaluate whether to engage outside assistance or use your internal resources to reduce your costs and enhancing vendor performance. Remember, only by using multiple whole portfolio points (obtained from "inside" the industry) to compare with your topical cost and advantage levels are you assured that you are truly receiving the primo probable value from your vendors.
David Cantliffe is the President and Founder of BottomLine convenience LLC located in Louisvil! le, Colorado. BottomLine gratification is a performance-based,! client advocacy consulting group that specializes in reducing hard dollar costs for miniature, print and fax expenses while simultaneously enhancing vendor assistance support levels.
David has all over 18 years exposure as a sales representative within the copier industry combined with 5 years perspicacity as a dealership principal. You can download free ezines containing additional cost reduction ideas at http://www.bottomlineadv.com inside the resources tab, issue an e-handWriting with questions or contact David at 888.400.3600.
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