The difference between price & cost…#in..#pmot

price & cost

How many times have you inherited a project and had major problems with a supplier who was selected because they were cheap !

This perception of “cheap” is normally based purely on price and takes absolutely no account of the total cost of ownership of the product or service.

Selecting suppliers purely on price is never a good idea.

Here are some great tips from Businesslink:-

What you should look for in a supplier

There are a number of key characteristics that you should look for when identifying and short listing possible suppliers. Good suppliers should be able to demonstrate that they can offer you the following benefits.

Quality and reliability

The quality of your supplies needs to be consistent – your customers associate poor quality with you, not your suppliers. Equally, if your supplier lets you down with a late delivery or faulty supplies, you may let your customer down.

Speed and flexibility

Being able to place frequent, small orders lets you avoid tying up too much working capital in stock. Flexible suppliers help you respond quickly to changing customer demands and sudden emergencies.

Value for money

The lowest price is not always the best value for money. If you want reliability and quality from your suppliers, you’ll have to decide how much you’re willing to pay for your supplies and the balance you want to strike between cost, reliability, quality and service.

Strong service and clear communication

You need your suppliers to deliver on time, or to be honest and give you plenty of warning if they can’t. The best suppliers will want to talk with you regularly to find out what needs you have now and how they can serve you better in the future.

Financial security

It’s always worth making sure your supplier has sufficiently strong cashflow to deliver what you want, when you need it. A credit check will help reassure you that they won’t go out of business when you need them most.

Always remember the difference between price & cost

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project managers and business consultants