The Art and Science of Buying Wisely

New activities associated with successfully running a business have less prestige or more importance than purchasing.

The sales guys are looked at as the ones who go out and bring in the revenue. Engineers are those math wizards who make our mousetraps better than those of our competition. Production gets the product out the door-frequently under tough circumstances and tight deadlines.

Yet most of the companies in our industry are assemblers of components. We take what someone else already has manufactured, and we use that to produce a finished product. But before we can assemble the pieces, we have to buy them.

Buying wisely has always been a key component in any business, yet purchasing decisions today are more critical than ever before. Competition has been intense, and it has been extremely difficult to make price increases stick. With unit costs stable, the path to increasing profits has been to drive out costs and to increase productivity. All operations of our company are affected-and that includes the way we buy things.

For manufacturers, one popular cost-reduction measure has been outsourcing-buying goods and services that we used to provide ourselves.

"Independent surveys suggest that there is as much as 30% waste in many manufacturing processes," says Dr Woodruff Imberman, a management consultant based in Evanston, Illinois. "That is a large and expensive target. Managers of manufacturing facilities attack that target by outsourcing-throwing the burden on suppliers. The growth of outsourcing has put great pressure on suppliers, since OEMs keep demanding greater service at less cost. The greatest pressure to curtail costs is clearly on the suppliers."

As a truck manufacturing executive said recently, "Our suppliers are being asked to deliver just-in-time, with zero defects, and to shave prices every year. This used to be something we would politely ask our suppliers to do. Today, there is no politeness. It is a must."

Imberman describes what the purchasing department of a major company expects when it brings prospective suppliers together for a daylong bidding conference. "The song the company sings in the morning is quality, prompt delivery, and dependability," he says. "But in the afternoon, it is price, price, price. And that's the tune they sing as they march you out."

This edition of Trailer/Body Builders is designed to help make the purchasing process easier. For example:

* What are your options? Before you can buy, you have to identify the seller. With multiple sources of supply, the greater your options. Beginning on Page 165, we list the companies that supply the products and services that you typically need if you are a truck equipment distributor, trailer dealer, or a manufacturer of truck bodies or trailers. This year's directory lists 818 of your most favorite things to buy. Approximately 1,250 companies provide those products and services, for a total of 6,636 listings. * What are they doing differently? Perhaps you are familiar with the company, but you aren't aware of the most recent products and services they have to offer. We bring you the latest from several exhibits of truck- and trailer-related components. This year's International Trucking Show contained a surprisingly large number of new products, particularly in the area of trailers. For companies in search of laborsaving and quality-enhancing fabrication equipment, we have a report on The American Welding Society's annual exhibition. Also this month is a report on the latest truck bodies and equipment for the solid waste industry seen at Waste Expo in Atlanta. * How can I get it more conveniently or effectively? Technology makes it possible for you to purchase products that your business needs-while sitting in your home, in your underwear, in the middle of the night. Many see this as the way of the future, making buying (and shopping) a process that knows no store hours or geographic limitations. How is our industry using e-commerce, and what potential benefits does it offer? Rick Weber's report on Page 68 looks at where we are now and where we may be going in the future. * Where else can I get it? Customers want it faster and at less cost. Buying parts from companies other than the OEM can provide an alternative source of supply. However, the story by John Nahas on Page 116 explores some additional issues that may need to be considered.

Other stories in this month's issue also have implications for buyers. It's our hope that what you read in these pages will help you make your all-important purchasing decisions. We at Trailer/Body Builders may not be from the government, but we are here to help you.

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