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Everything is ok i.e. should cost analysis, periodic analysis of price list considering RM price fluctuation and currency fluctuation, cross checking with previous price etc. etc. to know that supplier is not overcharging you.......... but from my rich experience in procurement, I learned the most successful tool to control the supplier not only for this issue but for any kind of issue is the relationship what you are having with your supplier. Any sourcing guy could take supplier in confidence if the relationship is good. If supplier is taken care properly, supplier will also always care. Relationship will always develop trust which is really helpful for successful sourcing for betterment of the organisation as well as suppliers.
Approach more number of suppliers and compare the prices & quality with already purchased products, you can find better one
Before to decide to cooperate with any suppliers,you should benchmark the differents quotation and make final choice based on specific criteria such as (price,quality,certifications ect..)
Then you can controle and monitor the price evolution in the market through RFQ.
If you do a good benchmark the risk of price evolution and overcharging are low.
Price Comparism is key to price negotiation.Thsi is done by requesting for various qoutes from differnent suppliers.
it invoves the following
compare quotations and invoices from other suppliers
check on your previous purchase price and compare
Visit exhibitions and ask for preliminary prices
compare with different buyers who buy same commodity
3 Quote System from different suppliers
Create a schedule of rates for the last three months for product, keeping in mind price increases due to commodiates.
Doing RFQ with different supplier will ensure market prices trend and also will help in finding best prices for the purchased items,
also online platform like Ariba and Zycus can help
As 'Purchase' is the first element which affect the product cost & decides 'Profitability' of company, because it studied that 1% saved in Purchase Function improves the Profit of Company by 2 to 3 %, Taking this point into consideration As 'Purchaser' you have to procure material in Cost Saving manner. hence, getting straight there are following ways to ensure your supplier is not overcharging you.
The most effective tool to get over all things is the Relationship you build up with your supplier. Its that how effectively you handle & Negotiate with a specific supplier to overcome such situation.
In addition to that there are following ways such as,
1. Effective management of Vendor database.
2. Development of new vendors.
3. Request Quotations from other Suppliers for the same Product.
4. Evaluating the Vendors & negotiatingthe price.
5. Market study.
ensure competition by inviting severai suppliers to provide arequest for quoation and by conducting market research
One should always have atleast 3 Quotations.
Sourcing Analysis, reach out for supplier' suppliers.
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