Open-book trading remains elusive

28 November 2002
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28 November 2002 | David Arminas

Purchasers want the majority of their suppliers to use open-book trading but very few have managed to get more than 10 per cent of them on board, according to a survey.

To the question, "with what percentage of your supplier base would you like to trade open book" - where client and supplier have access to each other's accounting and trading information - 28 per cent wanted at least half their suppliers on board, compared with only 7 per cent that had achieved it.

Anthony Greenfield, head of learning at Cobalt, the business performance improvement consultancy that jointly ran the online survey with SM, said: "It is difficult to overcome the traditional mistrust of suppliers, but it remains for purchasers to break down these barriers."

Manufacturing companies were usually better at open book because they often dealt in less controversial areas where there was more public information available on prices, such as raw materials, he added.

"It is more difficult when trying open book for overheads and profit margins, as it is a question of how to apportion these."

Respondents said that the biggest advantage for them and they believed also for their supplier was the ability to identify cost drivers and to put in place actions to reduce costs.

The survey of 142 buyers also found that data collection and analysis skills were the most needed by those wanting to make better use of open-book costing.

The ability to monitor results was the next most needed skill.

• The winners of Cobalt training in our competition were: supplies manager Mark Pearce, manager Julie Hoare, supply chain managers Ray Kirby and Sally Phillips, and buyer Steven Taylor. Congratulations to all five of them.

SMnov2002

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