Procurement's Market Intelligence Partner

In January of 2022, inflation reached its highest rate in 40 years. Scarcity of raw materials, supply chain disruptions and labor shortages have contributed to rising prices, impacting business and consumer budgets alike.
 Yet when suppliers come calling for increased prices due to inflation, it can be difficult to tell what’s justifiable and what is just an attempt to take advantage of the current environment.
 That's why we invited Art of Procurement’s Philip Ideson, Kelly Barner and Helen Mackenzie to discuss strategies that procurement professionals can use when faced with inflationary increase requests.
 
 Q&amp;A Insights
Our panelists held an insightful Q&amp;A-style webinar, moderated by Ashley Cruz of ProcurementIQ. Watch the full webinar to hear the responses to audience questions, such as:
<ul>
<li>Would a Should Cost Analysis help procurement identify the true nature of cost increases?</li>
<li>What documentation should procurement request to justify increases associated with employee wage growth?</li>
<li>What are best practices for breaking down and analyzing increases across a supplier’s catalogue of 100,000+ SKUs?</li>
<li>What are best practices for dealing with cost increases tied to CPI, which varies widely from country to country?</li>
<li>How should procurement respond if a supplier doesn’t want to be transparent about their costs?</li>
</ul>
 
Food for Thought Along with questions, attendees submitted insightful feedback and tips related to the discussion. Read some of our favorites below:
 
“Getting a supplier to align that the discussion is about cost rather than price can be used to help highlight the intent is to manage costs and help them preserve their incremental margins.”
 “RFI/RFP is certainly a good way to turn up the fire on the vendor issuing a price increase and may deter them from pushing forward with the request to not lose the business.”
 
“I agree with the ‘5-year-old’ approach of asking why multiple times. That exact situation occurred in a negotiation when the supplier wanted an escalation clause. It turned out their need was for staff retention, so we agreed to a very narrow set of circumstances for price increases.”
 
 
Digging Deeper Our live Q&amp;A session offered lots of answers to audience questions, but we didn't quite make it through the full list. Below are some of the lingering questions and our suggestions for how to best address similar scenarios:
 
1. Are shorter-term agreements a good idea for 2022? While you always run the risk that prices could continue rising, if you can’t negotiate a contract with pricing tied to a cost index, a shorter-term agreement is likely preferable. Just remember to balance the reduced risk of a shorter-term contract against the added time that your team will spend on the contract again in just a few months’ time.
 2. How should we approach multi-year agreements, given that suppliers are likely to hedge and include a margin for their own safety? The benefit of multi-year agreements will vary based on the product, and the size and importance of the contract to your business. If it’s a critical product for which you foresee supply chain issues, securing the volume early may be worth the added cost. If it’s a contract substantially longer than the market average contract length, then you should be able to negotiate a highly favorable discount. Either way, the best strategy to mitigate wide safety margins is to tie the price movement to an index, especially if the price of input costs tends to be volatile. You can also try to negotiate a long-term contract that allows for annual price and volume review, or one that has an opt-out clause.
 3. How can we mitigate increases when service providers want to tie their price to Cost of Living Adjustments (COLA)? The COLA index and Consumer Price Index (CPI) are both measures of inflation that intend to capture consumer costs, such as food and beverages, housing, apparel, transportation, medical care, recreation and other goods and services. Therefore, COLA and CPI are generally bad indicators of supplier costs. Our recommended strategy: Keep asking “why” to dig deeper with the supplier, determine how closely it has historically aligned with their costs, and offer an alternative index, or work to negotiate a standard fee cap instead.
 4. What are best practices for mitigating cost increases with your largest supplier, or when the supplier has already developed a deep knowledge of internal platforms and processes? When the relationship is critical to business operations, or switching costs are so high that the supplier knows that option is off the table, buyers lose a lot of negotiation leverage. A partnership-focused approach to negotiations will serve you best in this situation. Try looking for ways to reduce the cost to serve, reduce demand internally, or work with your supplier to find other points of value that you can give (e.g. longer contract term) in exchange for a smaller increase.
 
 
Interested in more events like this? Share your comments and suggestions for future webinar topics by contacting your ProcurementIQ representative or <a href="mailto:marketing@procurementiq.com">marketing.iq@procurementiq.com</a>.

Art of Procurement's Phil Ideson, Kelly Barner and Helen Mackenzie share best practices for handling cost increase requests in the current business environment.

Inflation Buster - Tactics to Mitigate Cost Increase Requests

As procurement organizations mature, the types of value they are expected to deliver broadens – leading to the need for correspondingly more market intelligence. But being able to access that information and knowing how to put it into action immediately are not quite the same thing.
 
Art of Procurement's Philip Ideson, Kelly Barner and Helen Mackenzie talk with ProcurementIQ's Ashley Cruz and give advice on how procurement can use category specific information to inform their sourcing and negotiation strategies without slowing the business down.
 
Learn more about:
<ul>
<li>The value levers market intelligence helps procurement pull</li>
<li>Understanding how buying power (or negotiating leverage) should affect category level spend management strategy</li>
<li>Factoring market dynamics into opportunity assessments to guide timing and approach</li>
<li>What external information procurement needs to have at their fingertips for each spend category</li>
</ul>

The experts at Art of Procurement talk through their experiences with market intelligence, offering real world applications for cost structure data, buyer power scores and more.

Turning Insights into Actions that Transform Procurement's Impact

ProcurementIQ is dedicated to providing the highest quality data and intelligence so you can make the best and most efficient decisions. This brief video will go over our new Vendor Management tools. 
 
We’re expanding our buying lead time section to map out how much time should be expected at each key stage of the purchasing process, based your size as a buyer. This is a market average, but it can help your buyers plan ahead appropriately.
 
We’re also building out a more detailed list of vendor qualifications to replace the shorter Buying-Decision Scorecard. We rank the importance of each factor on a scale of 1 to 5. This will allow you to choose the qualifications that best match your needs and assign weightings accordingly. 
 
We've added 3 new sections under vendor management: Key Contract Clauses, Key Performance Indicators, and Service Level Agreements. 
 
Key Contract Clauses will help protect your organization against undue harm by reviewing fair conditions for contracts and incorporating best practices for structuring contracts in this market.  
 
Finally, with the addition of the Key Performance Indicators and the Service Level Agreements sections, ProcurementIQ now covers all 4 key components of market intelligence for procurement. 
 
This new content will help you better engage with suppliers, input indices in contracts for performance, and better protect your business when price is not in your favor. 
 
We here at ProcurementIQ hope these new additions will help you understand market best practices, inform conversations with stakeholders about what to expect, and drive efficiencies in your processes.

Key contract clauses, KPIs and SLAs help you better engage with suppliers, input indices in contracts for performance and better protect your business when prices are unfavorable.

ProcurementIQ Vendor Management Tools

ProcurementIQ is dedicated to providing the highest quality data and intelligence so you can make the best and most efficient decisions. This brief video will go over our new approach to our Buyer Power Score.
 
We have updated the Buyer Power Score section to provide more clarity about where the balance of power sits within a category.
Buyer Power is now measured on a scale from negative 5 to positive 5 and is tracked over the past 3 years.
 
By looking at how buyer power has changed over time, you can assess how your position in the market today might compare to the last time that you went out to bid for this category.​
 
We’re also adding a forward-looking component to the buyer power score to help you plan for future purchases, as well as a “buy now vs. buy later” indicator.
 
For example, we have marked Janitorial Services as “Buy Later.” This tells you that market dynamics are expected to improve in the next year, and that you might do better to extend a current contract in the short term instead of going out to RFP. Even if that’s not an option, this score shows you right away that there are factors working against you today that you should be fully aware of before negotiating a long-term contract.​
 
We now also include the breakdown of how we calculated the score. ​In this case, you can see how much of a negative impact the Recent Developments have had on buyer power in this market. ​
 
The hover functionality for each component gives insight into why a score has changed, providing justification elements to your strategies.
 
With this more robust Buyer Power Score, you can use your spend analytics with our data to develop strategies for the upcoming year and identify unforeseen opportunities for buying now.

ProcurementIQ measures buyer power on a scale from negative 5 to positive 5 and provides a historical trend as well as a forecast buyer power score. Watch the video to learn more.

ProcurementIQ Buyer Power Score

ProcurementIQ is dedicated to providing the highest quality data and intelligence so you can make the best and most efficient decisions. This brief video will go over our new Recent Developments feature.
 
We know that the external environment can change in an instant. To make important decisions, you need the most up to date information available.
 
Now, when something like the Suez Canal Blockage happens, or a merger or acquisition is announced, we will analyze the impacts on each market that is affected. We will feed this information into the relevant reports, so major changes will be reflected within days of the event. This means you can be sure that ProcurementIQ report information is up-to-date.
 
We will also hyperlink directly to the report sections impacted, so you can easily see the most current market information.
The impact from recent developments will also be a key component of Buyer Power Score, providing you with context to key changes in your categories.
 
ProcurementIQ's new Recent Developments section will help you keep track of changes in high-spend categories, share relevant information with your stakeholders as you work through a project, and have access to valuable insights to regularly update category strategies or playbooks.

Get near-real-time updates on the latest news affecting dozens of categories. As the external environment changes in your market, you get the timely insights you need to act fast.

ProcurementIQ Recent Developments

No organization’s RFP process is perfect, but continuing to make the same mistakes over and over isn’t helping anyone – not you, not your internal stakeholders, and not your current or potential suppliers.
 
So, let’s get back to the basics with 4 Degrees North’s Phil Bode, an expert on how to craft great RFPs. He’ll talk about 5 common pitfalls that are tripping up your process and offer simple, actionable solutions to get you back on track.
 
In this webinar, you’ll learn:
<ul>
<li>Why effective communication is critical to avoid misunderstandings and rogue actions</li>
<li>How something as simple as version control can affect the perception of the RFP team</li>
<li>When and why to use old school checklists to keep people on track</li>
<li>How to maintain institutional knowledge across categories</li>
</ul>

Let’s get back to the basics with 4 Degrees North’s Phil Bode, an expert on how to craft great RFPs. He’ll talk about 5 common pitfalls that are tripping up your process.

Webinar: Improve Your RFP Process by Avoiding These 5 Pitfalls

Many organizations are considering the implementation of digital tools to optimize their procurement activities. But for newcomers to the digital procurement scene, the process can seem daunting at first. You probably have questions like:
<ul>
<li>Where do I start?</li>
<li>How can I create a successful digital strategy that will deliver the benefits we’re looking for?</li>
<li>How do I get buy-in from procurement and organizational management?</li>
<li>How do I avoid the hype and choose technologies that will work for me?</li>
</ul>
ProcurementIQ and Bertrand Maltaverne discuss ways to help you create a digital strategy for your procurement department that will benefit you, your stakeholders and suppliers, and your organization overall.

ProcurementIQ and Bertrand Maltaverne discuss ways to help you create a digital strategy for your procurement department that will benefit you, your stakeholders and suppliers.

Webinars