Few qualms about rate push

15 March 2010

16 March 2010 | Nick Martindale

Buyers have little sympathy for suppliers that complain about their margins being squeezed, the latest SM100 poll has found.

The survey of international buyers discovered 63 per cent did not feel guilty about reducing vendor margins, while 37 per cent were more sympathetic.

Many respondents felt suppliers had taken advantage of better economic situations in the past and now had to accept the reality of a changed market. This simply forms part of the changing economic cycle, purchasers said.

“A buyer’s job is to make the most of the market, just the same as a salesperson’s,” said Guy Allen, director of sourcing, supply and services at Fujitsu.

Others felt suppliers often had a poor understanding of their own price components and used complaints of low margins as a negotiation tactic. There was, however, recognition that there is only so far vendors can be pushed on rates and an awareness that squeezing them too hard could affect long-term relationships and security of supply.

“My suppliers are aware that [their] complaints are appreciated, but at the same time we have got strict cost saving targets,” said Vincent Fernandes, project manager at IT services firm Agilisys.

“It’s up to both parties to understand that this is a temporary phase and we will have to support each other in order to survive the current turmoil,” he said.

Even those that were sympathetic felt they had no choice but to do what was best for their own organisation.

Neil Dixon, procurement manager at vehicle leasing company LeasePlan, said: “There will always be buyers who take this approach and, if their business existence needs it, then it may well be the right approach.”

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