![]() ![]() The flip side of leverage: risk is high, but profitability is low. The only limitation for buyers is perhaps over-playing their hand and forcing a low-profit margin vendor into insolvency. Suppliers can be easily substituted as their offerings are much the same. The market dynamics of this relationship rest upon an abundance of highly commodified parts. Traditionally, procurement professionals have exploited this status to lower prices, but increasingly more advanced companies are looking to unlock the innovative potential of their suppliers. Where items have a high profitability, but a low risk factor, buyers possess the balance of power in the relationship and leverage this strength to obtain greater returns. ![]() Techniques such as e-auctioning and catalogs are an excellent means to redirect responsibilities either directly to suppliers or to internal customers that are requisitioning the goods. As such, the sourcing strategies deployed here focus on efficiency and reducing administrative burden. ![]() It clogs up time with peripheral concerns. Although important for employees to perform their duties, pens and paper do not have a significant impact upon the business, nor does their absence represent a serious threat.įor buyers, stationery is a nuisance. The most commonly used example in this segment is office stationery. These items are low risk and have a low impact upon organizational profitability. ![]()
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