Purchasers have no pity for providers

12 March 2010

12 March 2010 | Nick Martindale

Buyers have little sympathy for suppliers who 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.

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 have an impact on long-term relationships and security of supply.

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

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

* The full article and news focus will appear in the 18 March issue of SM.

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