PURCHASING | Unlocking Cost Savings: The Advantages of Team Pricing Checks with New Suppliers

Some Costs of Not Checking Pricing

1. Cumulative Price Creep

   • Annual increases of just 3–5% compound quickly.

   • Over 5 years, a $500 melt pressure transducer could end up at $600–$650 without competitive pressure.

   • If you buy 20–30 units a year, that adds up to tens of thousands in hidden cost.

2. Lost Leverage in Negotiation

   • Suppliers often assume “set it and forget it” customers won’t benchmark prices.

   • Without competition, they may stop offering discounts, bundled services, or stocking programs.

3. Missed Innovation / Durability Gains

   • Not checking alternatives means the extrusion team may miss new sensor designs (e.g., longer-lasting diaphragms, dual-function models with integrated thermocouples).

   • That results in higher lifecycle costs (more frequent replacements, downtime).

4. Budget Impact Across Many Parts

   • It’s not just sensors — bearings, heaters, filters, thermocouples, etc.

   • Small unnoticed increases across dozens of MRO categories can equal a full salary or more in lost value annually.

Best Approach to Stay on Top of Offers & Value

1. Annual or Bi-Annual Benchmarking

   • Review critical spares and high-spend MRO parts against at least two alternative suppliers once or twice a year.

   • Use RFQs (Request for Quote) even if you don’t plan to switch immediately.

2. Dual Sourcing Strategy

   • Keep at least two approved suppliers for critical spares like melt pressure transducers.

   • Even if Supplier A has 80% of spend, Supplier B keeps pricing honest and provides backup.

3. Total Cost of Ownership (TCO) Reviews

   • Look beyond unit price:

     • Durability (lifespan, fewer failures).

     • Delivery (reduced downtime, faster lead times).

     • Service (calibration, technical support).

   • Sometimes a slightly higher purchase price = lower lifecycle cost.

4. Cross-Functional Supplier Reviews**

   • Involve engineering, maintenance, and operations in supplier scorecards.

   • This ensures purchasing isn’t just chasing the lowest price, but true value.

5. Market Scanning & Networking

   • Subscribe to supplier updates, industry newsletters, and distributor alerts.

   • Trade shows or technical webinars often showcase new offers before pricing shifts.

Summary for Purchasing Managers:

Not checking pricing leads to compounding hidden costs, decreased leverage, and missed innovation. The best safeguard is a structured approach:

• Benchmark regularly.

• Dual source critical parts.

• Evaluate total cost of ownership.

• Keep the extrusion team engaged in reviews**

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