Where is Your Money Going

Knowing your marketplace is a key component of a purchasing strategy.

Certain things are not going to change about printing. Printers will always be laying ink down on a substrate. The speeds at which printers perform this operation will change. The equipment will change. Even the inks will change in terms of what characteristics they possess. And, of course, what will never change is that package printers must purchase these consumables from their suppliers continuously, unless they start making their own substrates and inks.

Managing consumables, as well as other major capital expenditures, requires a sound purchasing strategy based on several factors, including strategic sourcing, internal rationalization, and understanding the marketplace.

Strategic sourcing

Philip Carter, D.B.A., a professor in Arizona State University’s Supply Chain Management Department, provides a definition of the strategic sourcing process. “It starts with what you need, what do you need to support the plant, and then it’s a question of saying is this the right thing,” he says. After a printer answers the preceding questions, the internal work begins. “Then you start looking at possible suppliers. You might look very wide if you’re a big company or look locally.” Printers might consider who they purchased from in the past, the ones with which they may have the most negotiating power. “Then you have to decide how to approach them,” Carter continues. “Is it going to be putting out a request for quotes, looking at bids? Are you going to sit down and negotiate with two or three companies? Do you need to try to expand the value proposition in some other way—getting more services, getting better service, and so on?”

Purchasers then move to the contract phase and buy against the contract. “If the contract says I’m going to buy these parts from this supplier at this price, then somebody’s got to release orders to that supplier in a timely way,” says Carter. “Make sure when you get the order that the bills get paid, the pricing is according to what you negotiated, that you’re meeting your requirements, and that the suppliers meet their requirements according to the contract.”

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