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Article | July 31, 1995
How purchasing copes with higher prices (sidebar)
Purchasers skewer vendors for increasing prices
purchasing manager brewery "Raising your price is of no benefit to you if your customer goes out of business because of it." manager procurement chemical company "Explore better ways to manufacture materials to avoid increases using more value analysis value engineering. Suppliers are too lazy to seek out real savings and simply 'pass on' increases." director of procurement pharmaceutical laboratory "I feel higher prices have been caused by exports due to the value of the dollar. We in the U.S. have been loyal customers and have been penalized by package manufacturers' greed." senior business manager produce packager "We need a long-term five-year approach to pricing. We can't switch suppliers or materials easily. How can we stabilize the market and avoid large swings in prices?" purchasing agent snack foods company
purchasing manager wholesale bakery "What is Packaging World doing to alleviate or mitigate the situation?"
As part of the survey Packaging World asked respondents what point they would like to make to vendors that have increased prices. Many of the responses asked for more justification for price hikes and for more alternatives. Those were the two predominant answers. Other purchasing people were more angry and some more creative. This is a sampling of comments ranging from the most accommodating to the most venomous:purchasing agent soft drink company "Be honest with the customer."
purchasing manager dairy company "Be as honest and fair with as much information as soon as possible. Vendors need to assess in what ways customers can work with them in an effort to reduce their costs. Every effort should be made to further a win/win scenario. And there are extreme differences in how vendors handle increasing price situations." senior purchasing agent biscuit bakery "We have to find a solution to hold or even lower costs. Our customers will NOT accept any further increases to their products . . .Our customers have even dropped some of their private label SKUs in order to cut back." purchasing manager beauty care company "Vendors should strengthen the partnership relationship by absorbing some of the increase and decrease their profit margins just as we must."
"Due to price increases we are looking for ways to reduce the size of our package."
vice chairman sanitation chemicals company
"Purchasing people require predictability and/or relative stability in prices to allow adequate materials planning cost forecasting and profit projections. Early warning from vendors plus cost-reduction options are very important."
director of purchasing toiletries manufacturer
"It is an important service for my suppliers to offer more than just a 'material.' Today I need SERVICES such as consulting information on new packaging technology and recommendations to reduce overall costs at my plant."
purchasing manager toiletries manufacturer
"We'll look for less expensive packaging options for example go from PET to PVC from aluminum cans to tinplate."
director of procurement food canner
"I suspect conspiracy in various industries at the source of raw materials such as linerboard for corrugated and ethylene for resins. The actual COST of these raw materials did not increase only the market price through manipulation."
purchasing manager bottled water company
"When paper prices and plastic resin prices turn back down you had better be just as quick to pass on price decreases."
buyer/expediter surgical instruments maker
"Due to current market conditions we have just hired our first 'packaging engineer.' Hopefully new ideas and suggestions will be developed."
buyer canned foods maker
"When prices drop-and they certainly will-vendors will be squeezed with buyers using one vendor vs another to cut prices. This will cause suppliers to start tightening their operation to meet buyers' demands. Some vendors are going to bite the dust and rightly so."
purchasing manager flour miller
"I don't think my vendors negotiate with their vendors well enough."
"The suppliers should stand by their contracts. In corrugated paper all contracts were cancelled. If you did not want to take the increase you had the option not to buy from them. The contract wasn't as good as the paper it was written on!"
purchasing manager poultry packer
"It appears vendors are very short-sighted. A long-term strategic plan with regard to base stocks and their raw materials would be a better approach. It seems our suppliers have to react to the whims of their raw material markets. What kind of professional planning is taking place in the packaging conversion industry?"
purchasing agent produce packer
"Too many too quick price increases lead to breaking off long-term relationships. Vendors must control supply and demand to even out the spikes."
purchasing manager frozen foods processor
"We are in this for the long haul. Our vendors need to be more pro-active in helping us reduce costs to offset price increases. Those vendors that take this approach will be awarded more business."
"I would suggest suppliers treat us as customers as we treat our customers. Visits to discuss personally about pending increases future increases offering buy-ins before price increases and offering some consistency in the market pricing."
"Once everything settles out to a level I won't forget this experience and who worked with us and who just kept cramming increases down our throats."
executive vice president
"I understand the principle behind supply and demand. But when the general economy picks up I find it unacceptable for industry to take unjustified advantage of this situation. It causes recession and slows down the recovery."
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