All professional purchasers want to analyze supplier prices, but how to analyze and where to start are often difficult. Today, we will share with professional purchasers the effective path to price analysis. When conducting procurement price analysis, we:

1. First, locate the items to be purchased;

2. Clarify the price determining factors at the same time;

3. Then obtain regular market pricing through multiple channels;

4. Finally, we can conduct price analysis by working backwards from profits.

When positioning purchasing items, we often divide products into conventional products, leverage products, bottleneck products and core products. These items have different importance to the company. When we do price analysis, we must consider their importance to the company's production needs and make appropriate price cuts and concessions.

The purchase price is mostly determined by the determinants of the price, so when conducting a purchase price analysis, it is necessary to clarify what these factors are. Usually, the purchase quantity will affect the price. There will definitely be a price difference between buying individually and buying in bulk. Generally speaking, if the purchase volume is large and the transaction is continuous, the other party may give you a preferential price; the delivery period also has an impact on the price. If the purchaser requires a short delivery period from the supplier, the purchase price may be increased. Conversely, there may be a certain discount; in addition, macroeconomic policies also have an impact. Suppose I want to purchase sugar, I need to see what the international situation is like. The main sugar producing area is Brazil, so the Brazilian market also determines the domestic market; in addition, quality determines price. I believe everyone understands that this product is national standard, industry standard or non-standard? The impact on product prices is very obvious;

At the same time, the payment method also has an impact on the price. For example, the prepayment price may be lower, and the product price may be discounted if the payment is in cash. If the payment period is longer, the purchase price may be relatively higher.

The last thing is the purchasing channel. The prices of products purchased from manufacturers, first-tier suppliers, second-tier suppliers and terminal retailers are definitely different, and the prices also rise from low to high. As profits are added to the products at each level, the prices are naturally raised.

After clarifying the self-positioning and price determinants, it is necessary to obtain the conventional market pricing for comparative analysis. Usually, we can obtain it through informal means, inquiry, bidding and e-commerce; after obtaining these pricing, we need to summarize the data, and the summarized data can guide the procurement pricing, procurement volume and the most appropriate procurement time. In the process of obtaining pricing, we may encounter abnormal quotations. At this time, we need to clarify the reason for the abnormal quotation given by the supplier. Is it because of the quality problem of its products? Is it planning to enter the market first and then raise the price? Or does it have advanced productivity and can give a low market price through cost compression?

Profit backcasting is also a common means of purchasing price analysis. If you are a buyer with more say, you can use your own company as the starting point, rigidly circle your own profit range, and stipulate how low the supplier must supply; if you want to backcast through the supplier's profit, you can analyze and deconstruct from five aspects: raw material cost, labor cost, production management cost, operating expenses and profit, and finally analyze whether the quotation is reasonable and whether the purchase price is the best.

Finally, we connect these parts together to form the method and process of “conducting purchasing price analysis”!

Maybe the text is not very clear to everyone, we can look at the mind map above, which can help you understand more vividly and understand how to conduct purchase price analysis.

Source | Procurement and Supply Chain Column

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