New research from Probrand, the IT procurement platform, has revealed that organisations are struggling to ascertain whether they are paying the right price for IT, with less than a third (30%) of buyers confident they are getting good value all of the time.
The study suggests a lack of transparency may be holding IT buyers back, with the majority unaware of the speed and volume of change in the market – and how it can affect price and stock availability.
For example, when asked if they were aware that the IT market experiences up to 30,000 price fluctuations every day, 75% said ‘no.’
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The time it takes for IT buyers to navigate the market, and secure the right stock at the best price, was also a clear frustration. 20% said they spend more than 5 days a month on procurement processes, with many relying on manual systems to carry out research and place orders.
Ian Nethercot MCIPS, supply chain director at Probrand said: ‘‘IT buyers are under constant pressure to make budgets stretch further, but with IT price and availability changing on a regular basis, buyers are struggling to keep a real-time grasp on what they are purchasing and whether they are paying over the odds.
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‘‘We track the market on a regular basis and know that this is even more challenging in periods of flux, with some suppliers taking advantage of extremes of demand. In turbulent times, it’s not uncommon to see the margins being paid to IT suppliers rise to more than 50% for example.
‘‘The good news is that there are steps buyers can take to achieve greater transparency and unlock best price.’’
There are three steps IT buyers can take to gain greater market visibility:
- Deploy benchmarking tools: IT buyers can look to benchmarking tools which provides buyers with access to up-to-date and validated trade level information that will identify the exact margins suppliers are charging. This not only speeds up the IT procurement process but empowers negotiators to bring margins down. To eradicate any hint of profiteering, it’s crucial that this level of scrutiny is continuous, and that benchmarking is on-going.
- Get the deals you’re entitled to: IT buyers often miss out on extra discounts offered by vendors because they are not aware they exist – or in some cases, because they’re not passed on through the supply chain. Referred to as ‘special bid’ discounts (because resellers are required to bid for an allocation of the discounted products), they are offered by vendors for various reasons. This may be to generate interest at key times of year, target a specific market segment, speed up sales of slow-moving products or encourage bulk purchases. Increased visibility means buyers can proactively ask about any discounts and get the deals they are entitled to.
- Communicate with suppliers: Regular conversations with suppliers are essential to help buyers get an accurate sense check of the landscape and where constraints exist in the market. This knowledge will help to guide what is ‘normal’ and provide a clearer picture of what’s reasonable. You may still expect to pay a premium in strange or volatile times but this should not be 50% above the trade price.
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