Supply Excellence
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Buyer’s Market Opportunity (video): Direct Materials

December 19th, 2008 · by Justin Fogarty · 4 Comments · oil/energy, sourcing, supply management, supply market dynamics

Metals Category Manager Mike Petro makes the case for why “right now is the time to source direct materials”…

If you’d like a closer look at the facts and figures Mike cited - as well as information on other categories that provide immediate strategic opportunities - you can find them in the mid-quarter SupplyWatch update here. And I should also point out that Mike and several other Category Managers will be hosting a “Top 5 Categories to Source Now” webcast January 15th (register here).

***The video embedded above is from our newly launched YouTube page. Please check out the site and let us know what you think! Feedback, questions or potential topics are always welcome.***

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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4 responses so far ↓

  • 1 Jason Busch // Dec 20, 2008 at 12:48 am

    This is great … I’d like to join you on youtube, but I’m not as much a TV personality as Mr. Petro nor do I look as good with make-up applied … ;-)

  • 2 Aki // Dec 20, 2008 at 10:12 am

    Should the commodities that are sourced be for spot buy or for long term contracts.

    What if I have an existing contract at a higher price. Should i revisit it .

    Would that effect my lon term relationship with the supplier?

  • 3 Supply Excellence — Buyer’s Market Opportunity (video): Indirect Spend // Dec 22, 2008 at 1:51 pm

    [...] & Recent Posts Buyer’s Market Opportunity (video): Direct MaterialsChrysler and Ford: What’s an Auto supplier to do?Spend Analysis: Beyond ERPCredit Risk: Only Half [...]

  • 4 Mike Petro // Dec 23, 2008 at 3:32 am

    Just posting a quick response to the questions raised by Aki above:

    Spot vs. Contracts - the prices are right for purchasing virtually all direct materials on either the spot or contract markets. However, just a word of caution on trying to “time the market” with spot pricing. While spot prices can offer some great savings at certain times, there are considerable risks associated with the availability of raw material supply and mis-timing the market and getting caught with expensive inventory.

    Revisiting a Current Contract - While I can’t recommend breaking a formal contract that is in place, working with key suppliers to revisit overly one-sided contracts can potentially benefit both parties. Many buyers have worked with suppliers to re-negotiate their contracts at lower prices with the promise to extend the contract length for the supplier.

    Maintaining open conversations with suppliers about market conditions and contract terms is always a recommended strategy.

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