Competitive Advantage

Having a competitive advantage should be one of the most important goals of any business

As much as this responsibility falls under the marketing department, procurement managers also play a vital role. Their job is to make sure that the company gains a competitive advantage without having to spend too much money.

One of the best ways of doing this is to identify your customers’ biggest needs. It’s because this will let you in on their wants as well. Not understanding the difference between customer needs and wants can be a costly proposition. It means you may have to take shots in the dark instead of being able to see your target clearly.

The key thing to remember here is that customer wants are more important than needs to a business. They’re a much more powerful motivator and the actual source of competitive advantage. At the same time, you can’t know what your customers want if you don’t know what they need.

For example, let’s say that someone needs a new bed. In most cases, the knee-jerk reaction would call for them to look for the cheapest option. It will serve their needs well enough.

But if you show the shopper a bed with extra features, they’ll see that they might want other things beyond the bare bones. They don’t need them but they want them. A cheap regular bed will meet the same need as a feature-rich one, but now the customer has an option to satisfy their wants. They already have to buy a new bed, so they might as well go with one that they really want.

It’s these wants that you can build your competitive advantage around. By adding new features that others don’t have, you can secure your spot in the market.

Procurement Managers are Focused on Cost Reduction

While they serve many roles, procurement managers are still primarily focused on cost reduction.

Their role is complex for the many business areas that have to be cost-effective.

To do this effectively, they’d have to prioritise. As a procurement manager, your time is of the essence. You can’t waste time pursuing minor cost reductions. While you may be able to save some money, the time spent tends to outweigh the benefits and may cause you to miss out on more substantial savings.

Let’s take suppliers as an example. Your supply chain consists of various suppliers. When you work on reducing costs, you need to be careful about which suppliers to target.

For example, you wouldn’t want to pursue cost reduction from a low-end supplier. You might find a perfect opportunity to do this and save your company some money. But how much exactly would you save? Since the order size isn’t that big, your savings would be minimal. This would have very little effect as a whole.

And yet, you’d have devoted a lot of time and energy into negotiating lower prices. This can cause you to miss better opportunities at cost savings. In the long run, this can only hurt the business.

The point is this. Just because you have a chance to reduce costs, it doesn’t mean you should immediately take it. Before you decide which areas to focus on, consider the time it will take for you to secure lower costs. Are there any higher priority areas that you should look into first?

Unless you’re certain that the negotiation will be worth your time, you might want to hold off. See if you should perhaps go in a different direction.

This goes for all other business areas in your purview. To learn more about mastering time management, reach out to the team of professionals at Promotional Centre.

Marketing Department and Procurement

It’s easy to see how the marketing department and the procurement department may find themselves at odds.

The former wants to create as much buzz as possible while the latter is always trying to cut costs. However, these people don’t need to be adversaries. In fact, their company cannot afford for them to be. Instead, they need to work together to ensure the best return on investment.

One of the main duties of procurement managers is to keep costs down, that much is clear. And, this will involve managing the costs of the strategies proposed by the marketing department. However, there is more to this than just ensuring the marketing team doesn’t go over budget. What’s equally important is helping them use those funds effectively.

In other words, procurement managers won’t just ask how much money the marketing team is spending. They’ll also want to know how they’re spending it and if there’s room for improvement.

That is the core of the matter. Procurement managers do not want to be cheap. Their goal is to be cost-effective. And while this may sometimes limit the marketing team, it actually works in their favour on the whole. Simply, by managing the costs, the procurement team stretches the budget. This allows the marketers to turn more of their ideas into reality.

In practice, this means procurement managers need to focus on two areas. The first is managing the relationships with their suppliers. The marketing team will require products and services, and the procurement team will work with vendors to get favourable terms.

Secondly, procurement managers should help the marketing team find the avenues which will provide the best ROI. For instance, the marketing department may want to run TV ads. However, if the procurement team discovers this isn’t producing the desired results, they should recommend a better alternative. For instance, diverting money into promotional merchandise may provide stronger returns. When these departments work together like this, the whole company benefits.

To discover more ways that procurement and marketing teams can benefit their company, reach out to the Promotional Centre team.

Efficient Reliable

Efficient, reliable, exciting, cutting-edge, and so on

This is how all companies want their customers to perceive them. And the list could be much longer.

Similarly, it is easy to create a seemingly endless list of attributes to avoid. But no matter how long that list may be, “boring” will always be at the very top. That’s because there’s no silver lining when customers believe your brand and products are boring.

A company can deal with the fact that some people believe their prices are too high – it can position itself as a provider of luxury goods. A company can even survive (and thrive) if its products aren’t the most reliable but are affordable – you get good value for money. However, there is nothing to salvage when people see you as boring.

This begs the question of how a company develops such a reputation. At first glance, it’s the fault of the marketing department. But, there is more to it if you take the word of social psychologist Jenny Mueller.

Mueller believes that senior management often blocks marketing people from being truly creative. This brings about the unflattering brand image. But this isn’t something they do on purpose.

Many people have a negative image of high-powered executives, which is why it’s easy to see them as the villains here. But, Mueller’s research shows that when people find themselves in a position where they’re responsible for allocating resources, they automatically go for safe options.

This means those executives aren’t people who are opposed to the idea of fun. They are simply crumbling under the pressure of their role within the company.

There are two possible ways to address this. One is for senior management to change their ways. The other is for marketers to find ways of being both safe and creative. Here, merchandising can help.

To learn more about this, reach out to the team at Promotional Centre.

Business Owners Firm

The goal of every business owner is for their firm to grow

Not every company aims to become an international juggernaut, but they all strive for some expansion. While this brings many benefits, there are also certain growing pains involved.

One of the issues that growing companies face is the potential fracturing of the procurement process. This happens when individual departments deal with suppliers on their own. They all receive the same products, but they have separate contracts.

This makes matters more complicated than they need to be. What is more, this can result in higher costs down the line.

PASA, a website specialising in procurement news, showcased an interesting example of this. The case in question revolved around an international oil and gas company and its dealings with Coca-Cola.

Specifically, the company had two teams procuring products from the beverage giant. One team was fulfilling the needs of the company’s petrol stations while the other was buying products for their offices. The crucial part was that they had kept the details (and the contracts) from each other. By siloing information, the teams created extra expenses.

And, this was no small figure. It came out to $2 million a year. This became evident when the Chief Procurement Officer took an interest in the case and noticed the separate contracts. After consolidating them, those unnecessary expenses became a thing of the past.

This alignment had another benefit. Once the gas company had a better view of the entire situation, it also had a clearer understating of its relationship with Coca-Cola. This is very important for planning.

The bottom line is that consolidating contracts is an excellent way to bring your costs down. Siloing information can be very harmful, and your procurement team needs to do everything in its power to avoid it. To discover other things your procurement managers should be doing, reach out to the team at Promotional Centre.

 

Procurement Professionals

As a procurement professional, your role has evolved over time and will continue to do so.

As a procurement professional, your role has evolved over time and will continue to do so.

Nonetheless, you will always need to do everything in your power to keep costs down. Of course, this means ensuring every new procurement contract has the best terms possible. However, you cannot afford to disregard your existing contracts as they may also hold the key to hefty savings.

As such, re-examining them every once in a while is a crucial cost-cutting measure. This holds particularly true for any long-term contracts your company may have signed.

Unfortunately, many procurement managers don’t have a habit of doing this. In fact, 83% of them won’t challenge their suppliers with regard to the terms of their contracts. This is a huge cost-reduction opportunity that’s being wasted. As a result, your company may be leaving a lot of money on the table.

Think of it this way. If you signed a big contract with a supplier two years ago, your relationship isn’t the same now as it was back then. You’ve become a loyal customer and a stable source of revenue in the meantime. It is only natural that the terms of the contract should reflect this change going forward.

In addition, the market conditions may no longer be the same. The prices may have changed or a new supplier could have entered the picture. In essence, you need to compare the current conditions with those at the time when you signed the contract. Then, if your existing agreement is no longer giving you the best deal possible, it’s time to try and renegotiate the deal.

Of course, this can also work in the opposite direction. Specifically, the new market conditions may put your supplier in a stronger negotiating position. Even then, it’s crucial to carefully examine those contracts. This will allow you to know when to let sleeping dogs lie.

Examining existing contracts is just one tool successful companies use. To learn more about this reach out to the team today.

Procurement Managers Worklife

Procurement managers have a lot on their plates nowadays

But despite that, cost reduction will always be at the very top of the agenda. There are numerous areas you can focus on in order to cut costs, and time management is one of them.

As a procurement manager, your time is a commodity. A valuable one at that. As such, managing it effectively is crucial if you hope to keep the operational costs as low as possible. Strangely enough, this can mean that not taking advantage of certain cost-reduction opportunities is sometimes the correct choice. This sounds like the complete opposite of what a procurement professional should be doing, but there is a reason for it.

If you’re a procurement manager in a larger company, you’ll deal with many suppliers. Perhaps even dozens of them. As you inspect your supply chain, you might spot an opportunity for savings. For example, you could be confident that you’d be able to negotiate a better price due to new market conditions. However, there is a catch – the supplier in question is low-end and the order size is small.

So, you could save some money there. But, you need to ask yourself if doing that would be the most efficient use of your time. As mentioned, it’s a small supplier and you have significantly bigger orders to think about.

In a case like this, pursuing such savings may simply not be worth it. A minuscule price variation is not very likely to lead to significant savings. In the end, the time wasted could cost your company more than the savings.

This means you should tackle the big issues first. For instance, focusing on process management can lead to very significant savings down the line. Another example is marketing. Procurement managers need to ensure the marketing team doesn’t overspend as the potential for cost reduction here is great.

Today, the job of procurement managers is more complex than it’s ever been. But that also means they can bring more benefits. To see how it all comes together, have a chat to our team at Promotional Centre today.

Negotiation Process

Not every negotiation will work out in your favour

That’s an unfortunate reality of the business world. This can impact any area of a company but can be particularly devastating when it happens in procurement. For a procurement manager, accepting a bad deal at the end of a negotiation process is a nightmare that can have long-term effects.

In part, getting a good deal will depend on the procurement manager’s negotiation skills. But no matter how good of a negotiator the individual is, there is one thing which will always make their job much more difficult. That is entering the talks without having a solid negotiating position.

Solidifying your negotiating position means being crystal clear on several key factors.

For one, you need to know exactly what you want. Every supplier will try to make as much as they can. They’ll also try to sell you products which may not fit your requirements to the letter. The job of the procurement manager is to keep this in check.

You also need to be clear on what you can offer. By knowing this, you can create a realistic image of what you can expect in return. Finally, you also need to know where to draw the line. Every negotiation will have some flexibility, but there needs to be a limit to this. When you know ahead of time what point to never cross, you’ll know when walking away is the right move.

All of this you need to decide with key stakeholders in advance. Doing this will empower you for the negotiations, meaning you won’t panic. The end result is that you won’t overspend. And if you do end up agreeing on a deal, it will be a deal that benefits you.

There is a lot more your procurement department can do to give you a competitive advantage. Speak with one of our team members today.

New Customers Promotional Centre

When a company wants to go on a marketing offensive, it has quite a few options at its disposal.

Two popular choices are to run an ad campaign and to invest in promotional merchandise.

Both of these strategies have a number of benefits. Execute them properly and they’ll produce amazing results. But, a promotional product has one advantage over an ad that can turn out to be a huge factor in the long run. That advantage is repeat use. Think of it this way.

If you create an amazing ad, you can attract many new customers. People will see it online or on the TV and take the action you want them to. They’ll buy your product, use your service, etc.

However, it is not realistic to expect your every ad to be a smash hit. History has shown that there are always hits and misses. A company can have an amazing ad, a terrible ad, and quite a few that fall somewhere in between.

So, what happens when an ad doesn’t quite hit the mark? In essence, nothing. A person will see it and likely forget about it as soon as something else occupies their attention. The opportunity is gone. But, that’s not the case with branded merchandise.

A promotional item sticks around. For more than six months on average, as a matter of fact. And even that depends heavily on the type of product – a person can wear a good promotional jacket for years. This time brings extra chances for people to enter the sales funnel.

A person who takes your promotional item may not become a paying customer on that very day. Or during that month. But once they’ve used the item and seen your company name for the 50th time, they might. There are no guarantees here, only opportunities. And promotional items give you more opportunities than other forms of marketing thanks to repeat use.

If you’d like to discover other benefits of merchandising, ask to speak with one of our team members at Promotional Centre.

Competitve Advatnage Through Promotional Merch

Competitive Advantage Through Promotional Merchandise

One of the most important goals of any company is to obtain a competitive advantage.

That’s the factor which sets you apart and gives you an edge over your competition. Without a clear competitive advantage, it’s tough to differentiate yourself and carve out a piece of the market.

This is a huge task. It requires coordinated efforts and the input of numerous people. But while many departments need to do their share, procurement has a big role that’s vital to the overall success.

Specifically, when you’re trying to stand out from the crowd, it’s easy to lose track of spending. It’s important to invest in this, but you can’t go too far. After all, no amount of differentiation will help if it comes at a financial cost that makes it difficult to conduct your regular business.

This is where procurement managers come in. It’s their job to rein in the spending. Of course, they need to do this without jeopardising the message your company wants to send. It’s not an easy balancing task to pull off, but there are things that can make it easier. One of them is identifying exactly what the customer needs.

Heathrow Airport provides an excellent example of this. During the construction of Terminal 5, the initial plan was to focus on check-in desks. The management wanted to build large rows of them in an effort to make things more convenient for the passengers.

The procurement department examined the proposal and found it didn’t address the customers’ need. What the passengers needed was faster footfall. So, the procurement team proposed a solution inspired by the rapid checkout systems you’d see in supermarkets.

This proves how vital the role of procurement is. It would’ve been easier for them to accept the original proposal and find the most affordable check-in desks. But that wouldn’t have given the passengers what they needed and wanted. It would have been a misguided investment and poor use of funds.

There are other ways your procurement department can help you acquire a competitive edge without breaking the bank. Speak with the Promotional Centre team to learn more.

Small Business Merchandising

When it comes to marketing, all companies need to balance two factors.

One the one hand, there is the budget – how much funds they can devote to these efforts. On the other are the expectations – what they want to see in return.

No matter the size of the organisation, this balance is important. But, there is usually a big difference between small and big companies in this regard.

Small businesses tend to focus more on the budget. Specifically, a tight marketing budget is a very common issue that marketers of such companies need to work around.

That’s because they are more modest with their expectations. A company with 20 employees won’t expect to attract the same number of customers as an international business conglomerate. A small family business doesn’t expect its ads to have the same effect as the ads which air during the halftime of that year’s biggest sporting event.

But, that also means less money to work with. This puts marketers in a position where they need to find solutions which are very affordable but still produce notable results.

The situation isn’t much better in huge companies either. Those firms won’t shy away from spending millions on marketing, but they also expect to see comparable results. Once again, this puts marketers in an awkward position. When management gives you what is essentially a blank cheque, you need to deliver.

This is why marketing can often be a thankless job. You’re either worrying about the budget or trying to live up to colossal expectations.

Even though these issues differ, promotional merchandise can provide a solution to both. Merchandising provides an affordable choice for those worried about the budget. And when it comes to the expectations, the right promotional products can be remarkably effective.

Now, this doesn’t mean merchandising is the be-all and end-all solution to every marketing challenge. But it is a versatile and efficient way for companies to win over potential clients.

Procurement Department Role

The Job of the Procurement Department Has Changed

Ask a layman and there’s a good chance they’ll say the job of the procurement department is to source supplies and spend as little as possible.

Sounds straightforward and at some point in the past, that probably did cover the majority of a procurement manager’s responsibilities. However, the role has evolved over time and now covers several other issues.

What is more, those issues can often be significantly more complex than they initially appear. Take risk reduction as an example.

For every transaction, procurement managers need to analyse the associated risk. Primarily, this refers to examining the supplier’s financial status. The reason behind this is simple. If a supplier is going through financial difficulties, they may not be able to provide consistent service. When a supplier falls behind with their obligations, that can start a chain reaction of delays. In the end, this can negatively impact your operation in a major way.

But, a procurement manager can’t just look at the supplier’s finances and stop there. Instead, risk reduction has many other elements.

There are health and safety concerns to think about. A procurement manager also needs to make sure everyone adheres to the standards and best practices of their industry. This can be a rather long list that includes entries that aren’t immediately apparent.

As a matter of fact, a study examined this issue and highlighted a number of such concerns. A procurement manager needs to consider any physical damage that may occur to the inventory or the supplier’s facilities. They also need to take into account matters such as strikes or industrial disputes. A procurement manager even needs to account for events which are completely beyond the control of the involved parties. Natural disasters are an example of this. The study in question goes even further than this.

Essentially, procurement managers ensure successful cooperation between your suppliers and your company. To do this, they need to stay on top of numerous risk-related concerns.