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Why You Should be Careful! Many corrugated purchasers use
the traditional competitive bid method in an attempt to establish optimum pricing. As explained in the article, Bid Method Needs Rethinking, the bid method is not an effective process for achieving the best prices. Similarly,
purchasers are attracted to supplier contracts in order to maintain ongoing control over prices.So what is wrong with supplier contracts? First, if the prices are not optimum, do you want to be locked into
them? Secondly, the typical wording in the contracts does just the opposite of achieving the desired result. Instead of assuring fixed prices, the contract language often explicitly permits the supplier to raise prices
when the supplier's material costs go up. Do your customers commit in writing to buy from you and pay any additional costs that you experience over the life of the contract? You, the buyer, commit to buy from the
supplier but don't get a price commitment from the supplier. McCoy Corporation recommends a business review as well as a legal review of any proposed supplier contracts. In general, we do not advocate
supplier contracts as they do not accomplish your goals. We help you to achieve and maintain the best prices through a solid understanding of packaging economics and knowledge of supplier capabilities. |
