Tips for Renegotiating Supplier Agreements and Improving Your NOI


MRO-supply-1One of the most effective ways to quickly realize an increase in your company's NOI is to develop sound strategies when negotiating your MRO supply agreements. In an environment where the cost of needed goods fluctuates with the ebb and flow of an often erratic economy, a responsible management team remains focused on obtaining value for their supply dollars. Facility buyers can capture significant cost savings by aggregating their MRO and other supply purchases with these tips.

Use analytics to uncover your real buying needs

As the competitive environment of business continues to escalate, any manager who continues to rely on "gut instinct" will be left behind in favor of the mathematics-driven modeling of economic realities. When it comes to your MRO supplies, decision-making requires you to take advantage of the data available in terms of forecasting the likely needs of your buildings, equipment and customers. In the realm of real property management, history has provided reliable figures as to replacement needs and maintenance expectations.

Many organizations fail to optimize their purchasing by falling into procurement patterns that become normalized. At the end of the quarter, management looks to see how many "widgets" were used company-wide and simply seeks to replace what has been used. It is a simple enough concept, but one lacking the foresight to identify prospective savings.

Perhaps these widgets could have been purchased in bulk for an associated discount price with the expectation that they be used over a longer period of time. Perhaps historical indicators show that these widgets will become more expensive as the economy improves or raw materials pricing fluctuates, and thus it makes sense to purchase as many as possible during the present downturn. As can be imagined, there are numerous opportunities to realize savings if one pays attention to the indicators available through analytics.

Uncover areas where you are not getting the best market pricing

As a general rule, you will obtain a better price for your supply expenditures by agreeing to spend more. If a seller knows they can move a significant number of their widgets in one transaction, they are incentivized to facilitate the bargain with a lower per-item price. But how does that help your organization if there is a reasonable limit to how many widgets you need?

The answer is Raiven (formerly Qmerit). With our purchasing platform for integrated purchasing needs across a broad spectrum of similar industry partners, we use the power of bulk acquisition to lower your spending and bolster your net income. Further, by associating with a variety of large suppliers, we can track and identify the most advantageous terms available at any particular point in time.

Avoid purchasing redundancies among suppliers

A hidden pitfall with negotiating vendor agreements lies in the redundancy often associated with MRO supply purchasing. Many sellers carry the same or similar products as their competitors and are just as eager to offload their supply onto your organization. This creates an environment where many companies end up unnecessarily receiving duplicate products from multiple providers.

Typically, these redundancies come with a cost - either a price disparity that is not avoidable or what is essentially a forced or coerced sale of a product that your entity does not want from that particular vendor. Analytics and Raiven can provide a solution. By leaning on the data available and thus becoming more cognizant of what your MRO needs are, along with implementing an integrated purchasing platform, you can effectively renegotiate the terms of your existing supply agreements.

Implementing these tools

Bolstering your bottom line is of high interest to your organization, and Raiven can help you achieve that goal. With our powerful platform, you can streamline your purchasing decision-making and experience substantial savings in MRO supply purchasing. Find out how Raiven gives facility managers the tools and insights to uncover incremental cost savings on their MRO and other supply purchases by scheduling a demo today.

Contractor Compliance