Interesting supplier/manufacturer trends in selling B to B to purchasing departments in 2010:
I just got back from an advisory assignment to spend time working an exhibitor client’s booth at a trade show in Florida and interacted with their patrons. The interesting thing for me was how much "back channel" gossip that went on between other supplier/exhibitors giving me valuable insight to why and how CPG manufacturers are going to sell purchasing agents who are buying products for 2010 reselling.
The backdrop of this sourcing/buying CPG trade show is probably "old wine in new bottles" to sharp purchasing agents, but seems a bit more active than ever to me, given the economy today:
This was a B to B consumer products trade show i.e. Christmas ornaments, kitchen ware, chocolates, magazine subscriptions, gift-wrap, pizza, cookie dough, promotional toys, frozen desserts, premium coupons, jewelry, etc all to be resold next year in 2010 to consumers through reseller companies who were the wholesale buyers at this trade show.
Regarding Price, Quality, Delivery, most purchasing agents rightfully want all three, but will be settling for various combinations of only two with the third category, arguably, being the supplier's major control card in 2010.
Price; this year I witnessed in discussion was the buyers would hit the supplier hard for price. The suppliers game was to throw the lowest price out to get the order then make it up on changing the size, quality, or packaging and making up the profits after the fact. The delivery variable is based on how much the buyer paid, shipping the higher paying customers first and putting them to the front of the line. The larger the "terms or dating" the further back the buyer got their goods or higher the price quote based on the "real cost of using the money". Quality control "Hard Specs" and vendor guides better be tight this year or there may be some interesting charge back battles.
I just got back from an advisory assignment to spend time working an exhibitor client’s booth at a trade show in Florida and interacted with their patrons. The interesting thing for me was how much "back channel" gossip that went on between other supplier/exhibitors giving me valuable insight to why and how CPG manufacturers are going to sell purchasing agents who are buying products for 2010 reselling.
The backdrop of this sourcing/buying CPG trade show is probably "old wine in new bottles" to sharp purchasing agents, but seems a bit more active than ever to me, given the economy today:
This was a B to B consumer products trade show i.e. Christmas ornaments, kitchen ware, chocolates, magazine subscriptions, gift-wrap, pizza, cookie dough, promotional toys, frozen desserts, premium coupons, jewelry, etc all to be resold next year in 2010 to consumers through reseller companies who were the wholesale buyers at this trade show.
Regarding Price, Quality, Delivery, most purchasing agents rightfully want all three, but will be settling for various combinations of only two with the third category, arguably, being the supplier's major control card in 2010.
Price; this year I witnessed in discussion was the buyers would hit the supplier hard for price. The suppliers game was to throw the lowest price out to get the order then make it up on changing the size, quality, or packaging and making up the profits after the fact. The delivery variable is based on how much the buyer paid, shipping the higher paying customers first and putting them to the front of the line. The larger the "terms or dating" the further back the buyer got their goods or higher the price quote based on the "real cost of using the money". Quality control "Hard Specs" and vendor guides better be tight this year or there may be some interesting charge back battles.
Quality; This depends on how much the price was and when they wanted it. The better factories and workers go to the buyers who ordered early, and paid the highest prices. Quantity counts, but many suppliers need cash in early so they appeared to favor early orders and premium price offers.
Delivery; Many purchasing agents tried and some were successful in delaying the delivery dates to save on warehousing lines of credit, and have the option to cancel the orders if they were not turning. These show suppliers indicated to me they now react to P.O.s that have "stretched" delivery dates as a "cry wolf syndrome". They take product from those piles and give it to the companies that bring it in the earliest. The back orders and non shipments last year were at an all time high.
One last discount "trick" was the freight companies i.e. common carrier, overnight, air etc. I noticed a number of exhibitors were proud of the percentage discounts they negotiated for on cargo and shipping. What was interesting to me was the base charge per pound was different for all. Example: 60% discount off of $1.00 starting quote is 40cents....... for exhibitor "A's" freight. Exhibitor "B" got a 50% discount off .70 cents starting quote. You do the math! Who got the better deal????
2010 should be an interesting year, buyer beware!
Time for suppliers to get innovative. How about providing some value added services like listening to their customers customers and providing some pull throught marketing tactics, a win win for all. Most of the tactics are free now thanks to the tools out there.
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