There's waste in your operating budget that can be recovered ...if you be schooled where to look and how to free it up. The waste is being caused by overpaying for equipment and services. From my exposure, it's not decent a couple of dollars either. My clients are shocked to come upon they were wasting hundreds of hundreds (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 indulgence. "Enhancing value" means lowering the hard dollar cost for commodities or services while maintaining or improving vendor advantage support levels. When I initially meet with prospective clients, the view of being able to reduce print, print and fax costs, while at the indistinguishable stretch improving vendor performance is mainly met with some flat of skepticism. Statements are made comparable: "we already have the capital deal attainable, or I! have a titanic relationship with my vendor, I be schooled they are giving us the perfect deal earthly."
genuinely, the only way to really experience if you are receiving the tops dependent value from your existent vendor(s) is to obtain several pricing and duty benchmarks (bis known as "dossier points") to measure against your common costs and assistance levels.
What Are Your Options?
At that bit in my initial discussion with prospective clients, I am frequently asked "can't I honorable renegotiate with my customary vendor(s)"? You can, but what will that really express you? condign since your in progress vendor shapes cost and/or employ concessions, you will still not have any other abstracts points to evaluate the value you are receiving. I explain in another estimate piece titled "Why Partnering with Vendors Does Not obligation" that the opposing motives you and your vendor have prevent you from getting the champion value, outdoors additional leg dr! udgery.
Sometimes I am told "I can issue my own applicat! ion for Proposal (RFP) and lower my costs myself. that will set free the cost of your fee." That statement is true, 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 doubtless that internal efforts can reduce your prevailing hard dollar costs by.
Hopefully your procurement bureau has a record of their results from other similar projects. If you do not have an internal track record cook incontrovertible to evaluate the probability that their internal execution estimates are realistic. What previous maturity in that set industry lends credibility to their estimates? whip out satisfied you have an understanding of the ministration levels being provided by your prevalent vendor(s) and that you can accurately describe what fitness criteria you call for moving forward.
You on demand to look at the labor costs needed to acclimate yourself to the industry for that project. Any in! dustry is constantly changing to (hopefully) improve its stuff and services. From the last date your organization immersed itself in research of that industry, multitudinous details have changed. You must allow season for your procurement team to update themselves on the industry and vendor pool, as well as implementing the RFP itself. An estimate of ancient history 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 conceivable is. Subtract their fee from the savings estimate and compare that to what you apprehend you can achieve internally minus your internal project labor costs.
It will be far-reaching 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 r! eduction projection is accurate? Does the consultant provide ! a writte n guarantee of their projected performance and/or do they have verifiable references? The superlative kind performance guarantee is one that ices results and if the results are not delivered, the assistance fee is waived.
A reputable performance-based consultant is similar in manifold respects to a medical specialist. Unlike the general practitioner who requirements to be schooled a little about all of the human body, the specialist focuses on a bitty area and is the unequivocal expert in that area. Your internal resources have to feel certain a little about a lot of product/services that you purchase and use to operate your specialty. General practitioner actuality will allow a comparison of bid responses and/or proposals, but it will not allow you to discriminate if you are receiving the unrivaled value desirable. The general practitioner will not have "industry insider" proof points that the specialist already knows and uses to ensure you receive the pre-eminen! t within reach value.
Find out if any of your internal resources have back character inside the industry being evaluated, on the vendor side of the table, for at least five years. The bad previous pains exposure, to use your internal team's analysis, will be from those that have held positions in sales, executive management (CEO, COO, and CFO) or as a business partner 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 terrific 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 terrible to note that you will not have the lux! ury of obtaining whole serial points through a formal bid or g! athering proposals and next 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 plans carefully.
At that minim 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 head. If so, what is the supreme movement 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 super adventitious value from your vendors. Look at your largest ex! pense areas first and grindstone down through all the expense categories you feel are significant for your organization. The steps listed above will abide the synonymous, 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 especial "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 results points (obtained from "inside" the industry) to compare with your prevailing cost and benefit levels are you assured that you are truly receiving the unparalleled indeterminate value from your vendors.
David Cantliffe is the President and Founder of BottomLine blessing LLC located in Louisville, Co! lorado. BottomLine power is a performance-based, client advoca! cy consu lting group that specializes in reducing hard dollar costs for imitation, print and fax expenses while simultaneously enhancing vendor ministration support levels.
David has by 18 years skill as a sales representative within the copier industry combined with 5 years maturity as a dealership principal. You can download free ezines containing additional cost reduction ideas at http://www.bottomlineadv.com inside the resources tab, commission an e-air junk postal avail with questions or contact David at 888.400.3600.
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