Online Tools Increase Available Options

- As online tools become available, changes are in store for the way purchasing departments conduct business. Commodities such as raw materials purchased to well known specs are totally different than strategies used for custom built or "in house" designed products. However, both types of products can benefit immensely from the power of online buying sites.

For commodity purchases delivered price is probably the most powerful determinant of where to buy. As the Internet has grown, more avenues have opened to find bids from more vendors in far flung locations. This has resulted in lower, more competitive pricing for everyone willing to venture out beyond their traditional suppliers.

Trust - But what about your company's proprietary designs? Nearly all purchasing managers rely on a few known and trusted vendors to fill their needs. Is this the best strategy in a world of instant communication? Purchasing managers looking for custom products need several assurances before venturing beyond their comfort zone: 1) quality 2) price 3) good vendor communication 4) on-time delivery

Quality - Vendor quality is sometimes approached from a statistical point of view. Tracking of rejected parts, on-time deliveries with the associated graphs and tables are often part of the ISO requirements to successful purchasing. But more often, the critical quality ratings are subjectively stored in the purchaser's memory. Past unpleasant experiences with vendors on critical projects are not easily forgotten. Past history is a stronger influence than most people realize when selecting vendors for critically timed projects that have managements eye. Over the years, purchasing agent usually collect a small group of vendors who have proven themselves capable of quality work when the stakes are high.

Post Your Vendor Needs Online - Companies like Contract Auction and a few others, allow you to post your manufacturing job online for vendors to bid on. There are a few places online where you can do that and just watch manufacturers place bids on your job.

The Time Factor - Obviously there is a near limitless supply of quality vendors available who can also do as well or better than the purchasing agents crack vendor group. But the purchaser doesn't have the luxury of time to locate them all. With the use of online purchasing, this dilemma can be overcome. For example, Amazon and Ebay have slowly built a feedback system that removes much of our fear when dealing with online purchases. The same feedback concept can be enhanced to bring out different aspects of any transaction. Instead of rating the overall transaction, it is possible to break down important aspects including: quality, communication, delivery and price. The detail of such a feedback system can be just the thing that's needed to make the leap of faith on an untested vendor much more comfortable. In many ways an unbiased enhanced feedback system is a more powerful predictor of vendor performance than an in-house vendor survey system. More on this a little later.

Competitive pricing - It can be argued that the most effective price negotiation tactic to date can be seen in Bentonville, AK when Walmart buyers gather competing vendors in the same room at the same time. Few of us have the buying clout of a Walmart. However, with on-line reverse auctions we can approximate the same scenario as a Walmart bidding war. In many instances a reverse auction can actually be more effective in the fact that many more bidders can be present than what can be gathered into a Walmart purchasing cubicle.

Timely Delivery and Vendor Communication - The issues of timely delivery and good vendor communication can be well known by the cumulative effect of specific buyer feedback which grows more accurate with each transaction. A further advantage of a cumulative feedback system is that there is little to no in-house cost on labor spent to track and maintain records of each vendors status. Storage of the data is done off site and a quick summary is available to anyone on a moments notice.