• External Benchmarking: Benchmarks for supplies and services from members of your networking groups or friends in the industry. But make sure to review a broad range of items rather than just a few to make the time and investment worthwhile. • Purchased Data: There are some sites where data can be purchased to accomplish benchmarking, but might not be available in all expense categories. • Supplier Websites: Some suppliers publish discounted or regular prices, including discounts, on their websites, which can serve as useful benchmarks. • State Associations: Your state association might be a good source of benchmarks and price offerings in expense categories, but keep in mind that their pricing usually reflects a rebate paid back to the association, which might average 5% of the purchase price. WHAT TO DO AFTER BENCHMARKING After you complete your quote or obtain your benchmarks, there’s still work to be done: • Price Locks: When you obtain the right benchmarks and prepare to renegotiate with your supplier, be sure to “lock” the pricing and business terms for the life of the renewed contract or length of the pricing agreement. • Broad Range of Supplies and Services: Renegotiating supply and service prices for a broad group of items you use will effectively put a dent in costs and improve your profitability. If you only renegotiate a few items or categories, the savings won’t be enough to reduce overall costs. CAN’T FIND BENCHMARKING DATA? WE’RE HERE TO HELP! Developing an effective strategy to drive down costs and improve profitability is to utilize the time honored RFQ or price benchmarks. Using an RFQ is the best method to drive down prices and supplier costs. An effective RFQ allows you to negotiate with confidence and embolden you to pursue changing suppliers if your incumbent supplier is not competitive. Benchmarking will still take time, but StrategicSource can make it simple. Our results produce an average 25% cost reduction by developing a sourcing plan, executing the plan which includes RFQ’s, benchmarking and negotiation. If you’re planning to undertake this effort to get your spend management function set up and running correctly, you don’t have to go it alone. StrategicSource’s Profit Improvement Program helps you identify areas for long-term improvement. To learn more, please scan the QR code. https://strategicsource.com/ 33 MONTANA AUTO DEALER
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