I hope that you have enjoyed the article “4 Vendor Relationship Management Activities.”
Ask a group of procurement professionals how to achieve cost savings and you’ll likely hear suggestions about starting a sourcing project. Or negotiating. Or consolidating spend in a previously unmanaged category. Or any other activity that occurs before a long-term supplier is selected.
Then ask them how to achieve cost savings with current vendors and you’re likely to get a few blank stares. Extracting value out of existing and ongoing vendor relationships is often not top-of-mind in terms of where to uncover hidden cost savings.
But it should be.
I do an exercise when I conduct on-site procurement and strategic sourcing training. In this exercise, I split the team up into groups and give them some proprietary instructions for identifying cost savings activities in the context of an ongoing vendor relationship. And this technique of mine opens the floodgate for ideas!
The photo included in this post shows all of the cost savings ideas that came out of a 20-minute session that I conducted. And these are all ideas designed to be implemented when working with an existing vendor.
If you’re not looking for new value in existing vendor relationships, you are not maximizing your contribution to your employer!