Obsession with cost damages relationship with buyers

Cost reduction is still the main priority for procurement teams, despite a recent survey (conducted by KPMG) revealing that 38 per cent of buyers believe their obsession with cost had damaged their relationship with buyers.

This begs the question then, if buyers know that beating up their suppliers is counter-productive for them, then why are they continuing to cut these self-inflicted wounds?

A focus on short-term targets may be one answer. Buyers are provided with cost-cutting KPIs which they are expected to meet within the year, or at times, within the quarter. 

For those negotiating with suppliers, they have a choice of delivering long-term value to the business as a whole, or forcing down the cost and securing a yearly bonus.

Buyers however may need to shift their focus from the short-term to the long-term if they are going to fix this relationship.

It was perhaps possible to maintain such a narrow focus during the cash-strapped years of recession, but the more buoyant future may demand a more nuanced approach. If buyers are still encouraged to act only in the short term, companies will continue to alienate themselves from suppliers.

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