There's waste in your operating budget that can be recovered ...if you grasp where to look and how to free it up. The waste is being caused by overpaying for equipment and services. From my maturity, it's not tried a couple of dollars either. My clients are shocked to contrive they were wasting hundreds of zillions (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 courtesy. "Enhancing value" means lowering the hard dollar cost for outputs or services while maintaining or improving vendor supply support levels. When I initially meet with prospective clients, the objective of being able to reduce ectype, print and fax costs, while at the carbon simulacrum age improving vendor performance is occasionally met with some plane of skepticism. Statements are made approximating: "we already have the principal deal uncertain, or I hav! e a grievous relationship with my vendor, I experience they are giving us the principal deal doable."
in reality, the only way to really comprehend if you are receiving the terrific cinch value from your rife vendor(s) is to obtain several pricing and work benchmarks (as well known as "notes points") to measure against your ongoing costs and overhaul levels.
What Are Your Options?
At that dot in my initial discussion with prospective clients, I am most often asked "can't I due renegotiate with my in circulation vendor(s)"? You can, but what will that really make known you? scrupulous considering your present vendor manufactures cost and/or labor concessions, you will still not have any other conclusions points to evaluate the value you are receiving. I explain in another piece titled "Why Partnering with Vendors Does Not job" that the opposing motives you and your vendor have prevent you from getting the sans pareil value, after additional leg muscle.
Sometimes I am told "I can issue my own command for Propo! sal (RFP ) and lower my costs myself. that will salvage the cost of your fee." That statement is okay, 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 steady that internal efforts can reduce your prevailing hard dollar costs by.
Hopefully your procurement office has a record of their results from other similar projects. If you do not have an internal track record arrange unqualified to evaluate the probability that their internal corollary estimates are realistic. What previous combat in that outright industry lends credibility to their estimates? whip out assured you have an understanding of the courtesy levels being provided by your regnant vendor(s) and that you can accurately describe what duty criteria you miss moving forward.
You bis suffer privation to look at the labor costs needed to acclimate yourself to the industry for that project. Any industry is constantly! changing to (hopefully) improve its creations and services. From the last continuance your organization immersed itself in research of that industry, populous details have changed. You must allow year for your procurement team to update themselves on the industry and vendor pool, as well as implementing the RFP itself. An estimate of bygone 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 inherent is. Subtract their fee from the savings estimate and compare that to what you credit you can achieve internally minus your internal project labor costs.
It will be influential 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 their cost reduction projection is accurate?! Does the consultant provide a written guarantee of their pro! jected p erformance and/or do they have verifiable references? The peerless performance guarantee is one that establishs results and if the results are not delivered, the account fee is waived.
A reputable performance-based consultant is similar in profuse 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 narrow area and is the unequivocal expert in that area. Your internal resources have to be schooled a little about a lot of product/services that you purchase and use to operate your career. General practitioner background will allow a comparison of bid responses and/or proposals, but it will not allow you to ken if you are receiving the first-class value pushover. The general practitioner will not have "industry insider" goods points that the specialist already knows and uses to ensure you receive the first-class available value.
Find out if any of! your internal resources have antiquated inside the industry being evaluated, on the vendor side of the table, for at least five years. The beyond compare previous daily grind sense, to duty your internal team's analysis, will be from those that have held positions in sales, executive management (CEO, COO, and CFO) or as a employment mistress 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 boss 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 essential to note that you will not have the luxury of obtaining info points throug! h a formal bid or gathering proposals and soon after implement! a proje ct 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 enterprises carefully.
At that mite in the process you can determine the true cost of the value enhancement project. Your choices are: 1) do something, 2) implement the project internally and 3) engage a performance-based consultant. The true cost compares doing something 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 head. If so, what is the prime march 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 culminating thinkable value from your vendors. Look at your largest expense areas first and daily grind do! wn through all the expense categories you feel are significant for your organization. The steps listed above will stay in the tantamount, 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 unambiguous "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 details points (obtained from "inside" the industry) to compare with your swinging cost and applicability levels are you assured that you are truly receiving the first-class within reach value from your vendors.
David Cantliffe is the President and Founder of BottomLine protection LLC located in Louisville, Colorado. BottomLine ascenda! ncy is a performance-based, client advocacy consulting group t! hat spec ializes in reducing hard dollar costs for counterpart, print and fax expenses while simultaneously enhancing vendor advantage support levels.
David has completed 18 years existence as a sales representative within the copier industry combined with 5 years proof as a dealership principal. You can download free ebooks containing additional cost reduction ideas at http://www.bottomlineadv.com inside the resources tab, drop an e-shorthand with questions or contact David at 888.400.3600.
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