As List Week continues here at Know More Media, I'm pleased to announce that I received the first (of many. I hope) reader submitted Top 7 List to supplement my observations.
Thank you to Nikos Cratimenos, Procurement Director at Fourlis Group, all the way from Athens, Greece for submitting this excellent Top 7 List for managing office supplies focused on the RFP/cost savings part of the process.
1. Gathering information for spend analysis (budgets, volumes, prices) might be time consuming if back office systems and data are not available. Broaden spend category budget by adding all office supplies (including ink cartridges, other consumables, paper, printing material, etc) that may be currently bought from various suppliers and can increase your leverage.
2. Conduct a 80/20 analysis in order to detect the highest value items (these are the ones you should focus on), but also the basic items purchased during past 1-2 years. From this analysis create a basic list of “A” and some “B” items. All employees should only buy from this list (usually should not be more than 100 basic items)
3. Call at least 2-3 suppliers to submit RFQ replies. Reduce supplier base and select one preferred supplier that can supply the entire range of products, can cover nationwide distribution, and keep high customer satisfaction.
4. Negotiate with selected supplier and agree on special reduced prices for this “A” list. Use the lowest prices of all RFQ’s as a benchmark and agree with selected supplier to match lowest prices or go even lower for all items. You can agree to keep these prices stable for a period of 1 year. In cases of prices fluctuations (within the year) for certain items (ink cartridges, etc, ) then price revision can be dealt with separately with supplier. For any other “C” items, you can negotiate a special standard rebate for your company that can be applied to all purchases. Follow up each month that the company users buy only from A list (should amount to 80% of value). This is where the savings come from…track them down.
5. Use an e-catalogue that can distinguish all A, B, C items and prices and can make PO requisitioning easy and simple. Cost centre codes should be charged for PO’s confirmed by each department. Reduce all monthly transactions to 1 invoice for the entire company, broken down per cost centers.
6. Resistance internally to either adopt cheaper substitute products (but of similar quality) or to adapt to a new supplier must be managed by “owner” of this spend category. Communicate any new agreement within your organization and train users to use catalogues. Bringing the supplier in to present the service to all users is very important.
7. Top management support is not only vital but a “must.”
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Note from Matthew: Have you bought office supplies during your Procurement career? What was your favorite (or least favorite) commodity to manage? Send your Top 7 List to PurchaseRealm@ComprehensiveAdvice.com and I will share it with my readers.
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