Does Your Firm Meet or Beat the Market – Take Two

by on
Style:
Category:
Sourcing Strategies

Back toward the end of January, we authored a post whose title we ask every prospective metal sourcing client, does-your-firm-meet-or-beat-the-market?” Based on some recent prospect meetings, I’m starting to wonder if firms even care. On the one hand, one firm had gone through a lay-off, reduced hours in exchange for salary cuts and will be making some plant closures. And on the other hand, because of morale they felt as though cost reduction in the area of direct materials (this company cuts, machines and fabricates parts mostly made of carbon rod for major OEM’s) may threaten the purchasing manager.

We’ve heard that all before, at least 100 times. But I just can’t understand why a company would have less of a problem laying someone off than saying to one person, Look, we’re going to take a new approach to sourcing metals, one that does not involve going out to three bidders on a monthly basis and awarding the requirement to the lowest of those three bidders ” TO SAVE YOUR JOB ALONG WITH A FEW OTHERS. And yet I see small to middle market manufacturers stuck in this paradigm ” while the heads are rolling!

It would seem to me that if a $30m revenue job shop or value-add component/assembly supplier could save $350-500k annually, that would make an enormous impact on the bottom line. And yet, so few companies at this level are strategically sourcing. It’s as if we are still back in the 1960’s. So forget about does your firm meet or beat the market. Try this one: Are you going to survive by doing what you are currently doing?

–Lisa Reisman

P.S. Am I missing something? Drop me a line at lreisman (at) aptiumglobal (dot) com.

Comments (2)

  1. LP says:

    “strategic sourcing”…most companies use this buzz word to do the same old thing. I recently went to purchasing managers meeting and the entire table said in unison, “a good buyer is a good buyer is a good buyer”. They said they despise the term category manager, strategic sourcing etc. True Story.

    I can see where they are coming from but I can also safely say that most people focus on buying the same widgets for cheaper. No wants to fight the good fight and ask the question, “do we really need these widgets?”

    This “old” style of thinking is common in the financial world as well. Too many asset managers feel compelled to stay in the markets 100% of the time. The industry never asks, “can we beat the market or protect our client’s capital?” In fact they are content with almost matching the market. Mediocrity ensures their .85% or 2% in fees.

    This is a common theme among humans. Gallop with herd or take the risk of looking like a fool. It’s not a money thing. It’s all about being right and wrong. Ego. Most people associate a unsuccessful opportunity with failure. Failure = Loser. Most people don’t want to risk being losers. It’s takes a very special people to take a “failure”, turn that around into a learning experience and come out stronger.

    I always get a kick out of the people who never try yet laugh at other peoples failures. Maybe one ought to think that not trying is the biggest failure of all?

    Keep up the good work, Lisa, Stuart and Nate.

    Btw, if you ever wonder why I comment so often, it’s because I think that great blogs like this should always feel appreciated. You guys write great stuff and I for one appreciate it.

  2. admin says:

    Thanks Lloyd as always for your astute insight and for your words of encouragement. You always keep us on our toes! LAR

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.