Target Price or Savings: A Basic Sourcing Practice

At the comfort of my morning breakfast, I sipped upon a hot served tea with toasted buttery bread. A thought just triggered on my work pattern which jolted me for a moment. I insisted myself to cherish my breakfast and decided to leave the after-work effects on my mind which streamed to my mind even after a deep sound sleep. But it continued to shadow me till I reached my workplace. Genuinely! I sensed it was a palpable thought as the thing on my mind is the part and parcel of my routine. 

As a global strategic sourcing & procurement professional, I am not amused by the fact that we are always demanded to source an exceptional source with a proven track record to fetch a commercially viable deal. Day In- Day Out, we strive hard to attain it and on numerous occasions, we surpass all these barriers and meet the so-called “EXPECTATIONS”. That being said, the thought that propelled to me was whether I should continue to TARGET on PRICE or TARGET on SAVINGS to outshine EXPECTATIONS. 

On the contrary, the aspects of Price & Saving on sourcing front have close interconnection with each other. I mean “if you target a price, you are going to achieve a saving and if you target a saving you are going to achieve a target price”. With this argument, I was convinced for a moment but for a few moments. As my intent toward accepting this approach was restricted to some extent, I realized this approach is successful for short term spends or one time spend. But it does not end here; a sourcing mind will never sojourn on short term goals. Any business would pursue a long-term accomplishment to fulfill its sourcing desires. 

Time again, you must strategize yourself to get prepared to achieve long term objectives and to achieve that every sourcing event should be considered as an ongoing requirement for your business. A sourcing specialist should always keep in mind that concentrating on savings will only lead to short term achievements and cannot be deemed as a BEST SOURCING PRACTICE. The significance of such transactions can harness your forthcoming necessities and you might get stuck. A redeemer to such cases is only if you are not bonded into any legal contract. 

So, it is wise to TARGET PRICE whether a short-term obligation or a long term, it will prove to be a WINDFALL in any case. Lastly, profound savings will be meticulously placed on SPEND/SAVINGS MATRIX for your bosses to make them SMILE 🙂

I PREFER TARGET PRICE…