When you pay too much you loose a little money that's it but when you pay too little you loose everything most of the time because the item you bought was incapable of doing what you intended to use it for.
Explore your experience in handling Materials Management ? Saving Changes...
Even with the increased information available, rarely do we ever end up paying the perfect amount for a given product because the cost of delay will usually exceed the incremental savings of going from "good price" to "great price".
Purchasing is an exercise in risk management - you can almost always find a cheaper supplier, but how much solution or reputational risk are you willing to accept?
Kiron
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1 reply by Riyadh Salih
Dec 19, 2018 9:06 PM
Riyadh Salih
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Kiron, thanks for your contribution the idea is that we try to optimize the negotiation to win win situation with best price for best good and at the same time we need to look at the big picture of the lead time delivery in time is very important sometimes we pay hotshot but that shows lack of planning.
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Joshua RenderProduct Owner| CognizantHarrisville, Ny, United States
The trick is finding what you need and paying the right amount. We too often think of cost being equal to quality. We justify paying more this way. In some situations that may be true, you get better quality if you spend more.
In other cases, you are overpaying for a brand-name product when the same manufacturer bottles the same stuff up as a generic product. You are paying for a name on a container. The name doesn't really add value outside of a psychological one. Your end result isn't going to care what the box says on it. Well-known companies have taken advantage of their name recognition and charged more for it - despite there not being a difference in many possible product options.
Then there are those times when you pay too little. Sometimes that can be a low-quality item that doesn't meet the needed life expectancy. Other times that can be getting a great product at a bargain price.
The trick is figuring it all out. If I had to choose to overpay or underpay - it would depend on the scenario. Sometimes a cheap failed option may not cause a huge problem and it can be switched out quickly. In those cases, underpaying is probably better. If the cost to replace it includes a high cost outside of the product itself, overpaying for the product would probably be better.
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2 replies by Farid Alsakkaf and Riyadh Salih
Dec 19, 2018 9:18 PM
Riyadh Salih
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Joshua in some way you are right but those companies they have earned the brand name as a struggle of long years with consistency and the name would give you a sort of warranty
For example Gillette razor you can not compromise on its quality without having your face cut by other razor, same goes with cars / suv you can't compare Maserati Levante with Hyundai
Overall thanks for your comment
Dec 19, 2018 11:37 PM
Farid Alsakkaf
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when we say cost equal to quality this leads us to a critical question.. what is quality? is it the stainless steel material the pipe is made from, compared with galvanized steel or is it the convenience of use of the water heater by the end user? in other words .. is it the durability and saving of maintenance cost or is it the convenience of use (user friendly). It is the criteria that we put ahead before we check quality. The value then should be equal to the quality subjected to such evaluation criteria... not more and of course not less.
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Sam MotesManager II Business Sys, Operational Excellence| BA Systems Inc.Ellenton, Fl, United States
I agree with Farid and Kiron it is a matter of paying the right amount. It is integral to risk and vendor management. You can always have a vendor under bid to get their foot in the door and then pepper you with issues and additional funding needs that will outpace the higher vendor estimate you passed up. The hardest part is knowing what you are signing off on and that it will meet the needs of project scope related to time, cost and quality.
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2 replies by Farid Alsakkaf and Riyadh Salih
Dec 19, 2018 9:20 PM
Riyadh Salih
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Sam thanks for your contribution, that's why I try to always do vendor evaluation and benchmark with other users
Dec 19, 2018 11:17 PM
Farid Alsakkaf
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You said the right thing Sam, it is integral to risk and vendor management. But I would add one more critical thing, .. Planning .. with proper planning we will put procedure on how far and accurate we will verify the quality and how far and accurate we will evaluate and compare the value.
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Eric SimmsSenior Program ManagerBaltimore, Maryland, United States
I'd rather pay too much instead of too little if it means I can rely on the item's quality. The cost of labor and time wasted when dealing with inferior items usually far exceeds the savings gained from purchasing the inferior item, and in addition to lost time and labor in many cases it ends up being necessary to purchase the better item anyway.
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1 reply by Riyadh Salih
Dec 19, 2018 12:41 PM
Riyadh Salih
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Eric. totally agree with you I have seen many rework done due to cheap materials or even sometimes cheap labour
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
I definitely agree with Kiron but as Farid said, it is not a rule of thumb. Sometimes you pay little for some products and they perform as expected. You need to do proper risk assessment X Item for X Amount vs Y Item for Y Amount.
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1 reply by Riyadh Salih
Dec 19, 2018 9:23 PM
Riyadh Salih
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Rami, thanks for your feedback that's why it is always good to do comparative between many vendors and look at past performance.
I'd rather pay too much instead of too little if it means I can rely on the item's quality. The cost of labor and time wasted when dealing with inferior items usually far exceeds the savings gained from purchasing the inferior item, and in addition to lost time and labor in many cases it ends up being necessary to purchase the better item anyway.
Eric. totally agree with you I have seen many rework done due to cheap materials or even sometimes cheap labour Saving Changes...
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