Procurement: Hidden Costs


10 Feb
10Feb

I always think the key to ensuring you haven't missed any hidden costs is to........ask.

That awkward moment of asking your supplier if all costs have been submitted in pricing (questioning trust) is a much lighter moment than the one sat in front of your FD explaining the service costs that have now outweighed the savings.

Even if you have already submitted the costing and it has been approved internally, it is still not too late to probe the supplier and then communicate any extra costs back to your team.

It seems very simple, but if you are swept away with the deal and opportunity to shine, it can make the best of us miss the hidden costs. Buyer beware, stand back, look around, make the call.

Examples:

£15k saving on machine parts

Hidden cost: Long lead-time, specialist fitters required, £20k service fee per year

 £100k saving on freight

Hidden cost: Fuel surcharge and prices quoted net, £95k lost!

Initial order 25% saving

Ongoing orders plus service and admin charge 28% (3% lost)


UP.


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