Procurement leaders rely on their current suppliers for product prices and believe they get the best prices. This makes comparing buying and relative efficiencies, a difficult proposition and the savings is difficult to ascertain.
What We Do
An underlying trait seen in successful companies is their focus on controlling costs, driving efficiencies and mitigating any competitive risk and one of the ways to achieve all three is price benchmarking, whereby procurement teams can avoid inadvertently paying too much for any product, while efficiently managing resources and helping to identify any emerging comparative threats from lower-cost suppliers.
Tracking your pay outs for products and services, and comparing to current market prices is essential to ensure you remain competitive. However, it is often difficult to gauge the real costs in a competitive market. The ability for procurement to carry out price benchmarking using independent market prices reflecting current costs is essential in any cost analysis process.
Price benchmarking, simply put is comparing the prices you pay for products vis-à-vis that of other supplier companies on a like for like basis. It can be a one-off price comparison, at a point in time, or, can be an ongoing exercise at regular intervals. This process allows purchasing team make better informed purchasing decisions, rather than relying on guesswork.
Price benchmarking is no easy feat – keeping up with competitive environments in constant flux, tracking forever changing supplier catalogues, using dynamic product pricing is a challenging proposition etc. Comparing what you pay for goods and services vis-à-vis your competitors is impossible to ascertain, with few businesses transparent on what they are paying.
How We Do
The process of building price benchmarking requires the actual prices paid to suppliers for products and services to be compared with others. Making these like-for-like comparisons enables buyers and analysts to make informed, data-driven purchasing decisions.
Understanding how your supplier prices compare with other suppliers and the current market prices acts as a proxy for understanding competitor’ costs and helps businesses develop strategies to remain competitive.
This process can be time-consuming for procurement teams and requires access to current data from a range of sources that is timely and accurate. The access to data, along with the quality, accuracy and overall ease of use varies and this affects the process.
The in-house approach to acquiring and processing data for analysis is a significant time investment for procurement teams and often results in a reluctance to undertake the analysis. Other issues encountered, include:
- Difficulty in contacting suppliers and other sources for data to support price comparisons
- Organising and pre-processing data into a consistent format ready for benchmarking
- Assessing the accuracy, reliability and overall quality of data
- Procuring necessary permissions/ licences to obtain, store and use the data.
Drive sourcing efficiencies by using preconfigured sourcing templates that support your organization when negotiating cost savings through the utilization of bid optimization and leveraging of supplier data and performance.
Unlike traditional ROI that is calculated based solely on revenue, procurement ROI is measured by comparing department costs with the total savings it generates, both financially and operationally, for the entire organization.
Some organizations call the 20% of spend represented by 80% of their suppliers’ “tail” while others use the term to describe their indirect spend. Irrespective of this, SYNE enable you to take a more strategic approach and generate maximum value.
The procurement team of SYNE has years of expertise across most spend categories – direct and indirect and offer support through all stages of sourcing and supply chain management cycle to get the best price as well as the best value. SYNE guarantees risk-free savings through its contingency-based support model.