How to control suppliers

When the buyer gets a lot of bids from many vendors, regardless of how many actually deliver, the buyer can be sure to find the best supplier. Global sourcing can often break up monopolistic behavior by suppliers.

2. Find another supplier

There are two types of exclusive supply, one where there is more than one supplier, but only one of them is sourced from, and the other where there is only one supplier.

Usually the former situation is mostly caused by the buyer, the original many suppliers to cut down to only the best one. The latter is caused by suppliers, such as suppliers of exclusive products or exclusive agents.

In the former case, it's just a matter of ? the whole into zero? Unless technically impossible, each product will be supplied by two or more suppliers, to avoid the supply risk, to maintain healthy competition between suppliers. In the latter case, however, the solution lies in developing new sources, including new suppliers or substitutes. Of course, this cannot be done overnight and must be done over time. Due to the lack of market information, so in the short term must maintain a low profile, do not take the initiative to find suppliers to negotiate prices, to avoid suppliers to take the opportunity to increase prices, bargaining is the result of the buyer is still at a disadvantage, if you can establish good interpersonal relations with suppliers, signed a long-term contract, but also to avoid the purchaser in the absence of goods must pay a very high spot price.

3. Pay attention to the total cost of doing business

The supplier knows that the buyer has no other sources of goods and may bite the bullet, but the buyer can convince the supplier to make concessions on other non-price conditions. Every element of the total cost of ownership may result in cost savings for the purchaser. Here are some potential savings opportunities:

Deliveries: Negotiating the right quantity and frequency of deliveries for the buyer can reduce warehousing and freight costs.

Extended warranty: Instead of counting from the date of shipment, the warranty period starts when the product is first used. Purchasers can always argue that since the product is of good quality, there is nothing wrong with counting the warranty period from the time the product is actually used.

Payment terms: Any relaxation of normal payment terms will result in savings. Discounts for immediate payment are also a viable option.

4. One-off purchases

This works if the buyer expects the price of the product to rise. Weigh the future price increase against the related expenses and inventory costs, work closely with marketing to get the exact quantity needed, and make a one-time purchase.

5. Capitalize on a supplier's monopoly image

Some suppliers may feel uneasy about their monopoly position; after all, all major countries are more or less anti-trust. A clear example of this is Microsoft, which, although it holds a monopoly in the world, is uneasy about its position as such. So companies like this can be made to sit up and take notice when they are accused of exploiting their monopoly position, even with the slightest hint of unfavorable publicity.

6. Increase interdependence

Giving suppliers a little more business, for example, by prioritizing the original supplier when demand for raw materials increases, increases the supplier's dependence on the buyer. When interdependence increases, the other party's control will surely diminish.

7. Better information

It's important to have a clear understanding of the extent to which the supplier is dependent on the buyer. The supplier can't live without the buyer, and the buyer can take advantage of the fact that it has the largest purchasing volume to ask for price reductions, at which point the supplier will make considerable concessions.

8. Negotiate long-term contracts

When a product is needed for a long period of time, consider entering into a long-term contract. It is important to ensure continuity of supply and price control, and to take steps to predetermine the demand for the product and the timing of the increase in demand.

9. Join forces with other users

Purchasing jointly with other companies that have a similar need for the product, where one party purchases on behalf of all users, can be beneficial to all. There are many examples of monopoly supply zephyrs being used by both buyers and sellers. It's only the exclusive suppliers with low output and inefficiencies that purchasers should kill.

10. Involve the end customer

The opportunity to get rid of a monopoly supplier also comes to the buyer if they work with and inform the end user. For example, engineers tend to favor one brand because they don't know about the alternatives, and by explaining the difficulties of having only one source, they can often get buyers to purchase very different components.

11. Save for a rainy day, defuse the control

If the supplier enjoys a monopoly in the market, and the purchaser does not have an effective means of bargaining with them, then the end result is bound to be that the purchaser will have no choice but to bow down. Light acceptance of each other's harsh prices and credit terms, heavy to make their own competitive strategy to be restrained, missed business opportunities.

The mixed purchasing strategy: you can send a message to the monopoly supplier, so that they realize that it seems that the buyer can get the goods from other sources. Thus, they are wary of exerting monopoly power. And the strength of such initiatives can be randomized.

Reach out at multiple levels and cultivate? spokespersons? : It is necessary to strengthen contacts with suppliers at all levels of the decision-making chain, including its senior executives and production, quality management and financial functions, so that you can grasp a more comprehensive information about the supplier, the purchasing side of the negotiation and call for goods will be able to ease the situation. In addition, you can cultivate within the supplier to the purchaser's deep goodwill? Spokesperson?

These are the most important things that you can do to make your business work for you.

Build a top-notch team of procurement professionals: In order not to be hurt by the monopoly power of suppliers, it is important to appoint talented professionals to take on the purchasing role, and most importantly, to make suppliers realize the long-term value of the buyer.

A research method

(a) hold a symposium. Holding symposiums is an effective way to understand the effectiveness of corporate procurement and supplier performance. The research team convened a symposium of the Office, the Office of Tobacco Infrastructure Construction, the Tobacco Section, Financial Audit Section, Discipline Inspection and Supervision Section of the relevant personnel. Symposium departments on the daily procurement of materials, engineering project construction implementation and bidding work on the supplier selection and management methods, principles and procedures were introduced.

(ii) Field research. The research team selected a special person to follow the material procurement department to investigate the field to understand the supplier selection process, *** participation in procurement activities 2 times (May 27 to participate in the procurement of sporting goods once; June 15 to participate in the procurement of construction materials once).

(C) the distribution of questionnaires. Through the distribution of questionnaires to the various departments of the agency to understand their level of satisfaction with the performance of suppliers. *** issued 20 questionnaires, the actual recovery of 20, the efficiency rate of 100% (including 75% satisfaction rate, basic satisfaction rate of 15%, 10% dissatisfaction rate).

Second, the conclusion of the research

(a) The choice of suppliers is very careful. Procurement needs of the department, the financial audit department and discipline inspection and supervision departments in the bulk of material purchases before the necessity, feasibility, cost can control the scope and the specific implementation of the process of prior to the meeting to study, for the determination of the supplier is basically through the comparison of the form of purchasing, choose the best and use it, try to avoid a single source and a single brand. So the supplier is reliable.

(ii) for long-term fixed use (use can be changed to select) the lack of effective supervision of the supplier. The inertia in monitoring due to trust makes the goods or services provided by the supplier sometimes good and sometimes bad.

(3) Lack of respect for the interests of suppliers, as the interests of suppliers are not guaranteed, there have been cases of suppliers breaking contracts and failing to perform on time.

(d) The performance guarantee measures in the contract are not detailed enough. Contracts on the supplier default or unqualified performance of punitive measures is to recover the economic loss of the last line of defense, is the supplier management and supervision is not in place to produce adverse consequences of the final remedy, but also to promote the supplier positive, good faith performance of the effective constraints of the mechanism, so it is critical.

Third, related measures

The enterprise procurement management department should be in strict accordance with the "Shandong Tobacco Monopoly Bureau (Company) system procurement management approach (for trial implementation)" and "Linyi Tobacco Monopoly Bureau (Company) bidding and procurement implementation and management approach (for trial implementation)", pay close attention to the implementation of the responsibility to standardize the operating procedures, and implementation of suppliers. All-round management and supervision of suppliers. For how to be more effective management and supervision of suppliers, I talk about the following five suggestions:

(a) the declaration of the supplier and the collection of a combination of active introduction of the competition mechanism

Only sufficient and qualified suppliers to intervene in the open, fair, equitable and orderly competition mechanism, corporate procurement market can be full of vitality and vigor. The company's business is full of vigor and vitality. Financial audit, discipline inspection and supervision and regulatory departments as the supervision and management of corporate procurement, must be responsible for the law, according to the rules to fulfill the full range of suppliers 'management and supervision. Especially for local suppliers. It can be seen through the survey, if the enterprise for a long time fixed choice of a supplier, it is easy to produce supervision inertia, due to the lack of supervision, the supplier is prone to breed dishonest behavior of substandard, improve the offer. For this reason, the procurement responsibility should avoid long-term selection of a supplier, procurement to avoid single source and single brand, to make full use of the press, the network and other media, release information on enterprise needs. In this way, to facilitate the participation of more suppliers to declare, at the same time, the demand for enterprises can also take the form of public solicitation, so that enterprises can obtain more information on suppliers, and efforts to recruit outstanding potential suppliers, so that more suppliers to participate in it. Through this combination of supplier declaration and enterprise solicitation form, not only can enhance the competition between suppliers, but also allow purchasing enterprises to enjoy quality products and services on the basis of enjoying a more favorable price.

At the same time, clear the basic conditions of potential suppliers must be: a legal person, other organizations or natural persons with independent civil liability; have a good business reputation, a sound financial accounting system; have the necessary equipment and professional and technical capabilities to perform the contract, there is a good record of payment of taxes and social security funds in accordance with the law; to participate in the three years prior to the procurement activities in the business activities have no Major illegal records, etc. Potential suppliers applying for supplier qualifications, must provide the qualification application; by the supplier's local tax department audit, three years in accordance with the law to pay taxes; supplier's credit certificate issued by the bank of deposit; social intermediaries issued by the annual inspection of the balance sheet and profit and loss account; by the county-level (including county-level) public security organs to review the supplier's legal representative and the financial controller in the declaration of qualifications in the five years prior to the no Proof of economic crime records; suppliers of social security authorities issued by the local social security funds to pay a good record of proof; suppliers of products for the production license and certificate of conformity; in the past three years to undertake the same type of procurement projects, the notice of award, procurement contracts, construction units, written proof.

(2) The combination of the supplier's file and annual review, to provide a reliable basis for the enterprise selection of suppliers

The most effective measure for the scientific management of suppliers is the registration and annual review of suppliers. The company should be declared or enlisted to the potential suppliers to build a file registration, that is, to enter the enterprise procurement market suppliers to set up files and classification of classification management, the formation of a set of strict review, classification of complete supplier database. The supplier's file registration work, in order to ensure that the credibility of good, strong performance suppliers to participate in the competition, to ensure that the quality of enterprise procurement.

The declaration and solicitation of potential suppliers to carry out scientific archiving is very important for the enterprise to select suppliers later. Financial auditing and purchasing departments responsible for the file should be strictly on the gate, the scientific establishment of the form, the organization of suppliers to fill in carefully according to the item, the volume of archives, the establishment of a complete and standardized supplier files. At the same time, the organization of relevant departmental leaders and technical personnel, the establishment of the supplier qualification validation team, declared and enlisted suppliers to classify the qualification review. In the review process, one is to see the written information, item by item analysis. Second, the organization of personnel to conduct field surveys of suppliers, market research, to grasp first-hand information. The review of qualified suppliers file, take the same kind of hierarchical filing, that is, according to the project belongs to the same kind of nature of suppliers, according to meet the basic conditions of the supplier is divided into the upper, middle and lower three levels, archiving. Supplier files should include the following: enterprise procurement supplier declaration form, business license (original) copy, tax registration certificate (original) copy, institutional legal person code certificate (original) copy, with production, business or office space certificate (original), production or business scope and the main products, commodities directory, in line with national environmental protection standards, safety standards of the materials, participation in enterprise procurement activities, records and credibility of the materials. Procurement activities of the records and credibility of the materials, engaged in proprietary sales and agency sales of suppliers held by the manufacturer or sales agent to provide written authorization, power of attorney or supporting documents, the production and operation of the state has a special provision for the standard of the goods should be held by the special industry licenses, etc.. After registration, the registered supplier can be selected on the basis of the procurement needs of the priority of the registered supplier.

(C) the daily management of suppliers combined with dynamic assessment, forcing suppliers to efficiently perform

Strengthen the daily management of suppliers, first of all, we must strengthen the contact, to grasp the status of the supplier's business, the supervision team should be regularly to the supplier's business premises to investigate the understanding of the goods or services provided by the supervision and inspection. The supervision team should regularly visit the supplier's business premises to investigate and understand the goods or services provided by the supervision and inspection to see if the goods or services provided are of high quality and low price. Supervision team should provide timely feedback, listen to all parties to the supplier's reflection, found that the problem is dealt with in a timely manner, and the situation will be registered for the record, as an important basis for the renewal of the contract with the supplier for the next year. To provide false bidding materials, after winning the bid without the company agreed to contracting, subcontracting, or do not truthfully reflect the situation, unilateral breach of contract suppliers, the enterprise procurement management organs should be in the archives to reduce the classification level or will be included in the blacklist.

Dynamic assessment methods are implemented for winning suppliers. Enterprise procurement demand department and supervision department should designate a person responsible for the collection of purchasing entity on the supplier's service attitude, technical ability, product quality and other information, the implementation of dynamic assessment and management, and will be assessed truthfully react to the supplier. For suppliers to do a good job on the one hand to encourage them to continue to carry forward, for poor work on the other hand to remind them to improve, at the same time, for the supervision and inspection of the process of the emergence of the problem to focus on the next inspection.

Through the regular inspection of suppliers, irregular spot checks, suppliers can be prompted to tighten the string of efficient fulfillment, while also effectively preventing suppliers from substituting good, false offers.

(D) seriously deal with the supplier's questions and complaints, pay attention to the interests of the supplier, to achieve the procurement of both sides of the win-win situation

The importance of the interests of the supplier is also responsible for the performance of the enterprise, if only focus on the interests of the enterprise to maximize the benefits without regard to the interests of the supplier, will inevitably play a counterproductive role in the supplier in the absence of profits will be Appear to reduce the quality of the project, delay the construction period, can not provide quality service and other phenomena, and ultimately also affect the normal production and operation of the procurement enterprise. The legitimate interests of suppliers should be respected and maintained by the procurement enterprise, the two sides should cooperate on the basis of mutual benefit. Potential suppliers are the competitors of the procurement contract, the suppliers of the enterprise purchase order is the risk of the transaction and the bearer of the profit, whether the procurement contract is fair and whether the contract conditions are fair, is directly related to the suppliers of vital interests, so we must implement the effective protection of suppliers, the establishment of a scientific supplier challenge and complaint measures.

The main embodiment of: First, the purchaser should be strictly limited to unilaterally change or terminate the conditions of the contract; Second, the legal procedures that must be fulfilled, which is to prevent abuse of the rights of corporate purchasers of the most effective measures; Third, due to the purchaser to unilaterally change or terminate the contract of government procurement to the suppliers of the losses caused by the necessary compensation should be given; Fourth, the scientific relief mechanism to ensure that the suppliers of the legitimate rights. Facts have proved that only respect for the interests of suppliers demand, in strict accordance with the contract, in order to effectively safeguard the interests of both parties to the contract, enhance the social reputation, to ensure that the purchasing enterprise again bidding, procurement, supplier participation in the enthusiasm.

(E) clear violation of the supplier's penalties, build the last line of defense to recover the economic losses of the enterprise

The principle of honesty and good faith is the principle of supply and demand must comply with the principle of regulating the management of the supplier should be clear in the contract violation of the supplier's penalties. On the one hand, in the bidding announcement clear suppliers should meet the behavioral standards and behavioral norms of corporate procurement requirements, so that suppliers in accordance with the requirements of the procurement enterprise procurement to participate in corporate procurement activities. On the other hand, in the procurement activities, regardless of whether it is a bidding procurement or procurement of quotations, should be signed supply contract or agreement, in writing, the rights and obligations of the supply and demand sides, clear responsibility for breach of contract and the penalty standard, and in advance to the supplier to explain clearly, so that not only can prompt the supplier to clarify the relationship between the interests of the strict fulfillment of the contract, but also in the default of the supplier to come up with the basis for the claim.

Suppliers with one of the following behaviors should be counted in the supplier file, reduce its creditworthiness, and the seriousness of the situation will be disqualified from participation:

(1) provide false materials to obtain the winning qualification;

(2) take improper means to discredit and exclude other suppliers;

(3) with the Purchaser, other suppliers or procurement agency in bad faith collusion;

(4) Paying bribes or providing other improper benefits to the purchaser or procurement agency;

(5) Consulting and negotiating with the purchaser during the bidding and procurement process;

(6) Failure to sign the contract on time after winning the bid without a valid reason or failure to perform the contract on time;

(7) Refusing the demand side supervision and inspection or providing false information. The above circumstances enterprise procurement management department requires suppliers to rectify, and refuses to rectify, cancel the qualification of suppliers to participate in procurement.