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Bouwmaat logo
Fetim Group logo

HEMA

HEMA has over 750 stores in 9 different countries, selling household articles and clothing.

The Challenge

At HEMA the challenge was that we sell a wide range of different products. That is food, non-food and clothing. It is impossible to have in-depth knowledge about every single product, so our buyers and category managers can use the assistance of clever tools. The raw material reports have begun to form a core component of every talk with a supplier.

The Solution

We do not start negotiating without prior WTP preparation. Recently there was a tough negotiation with a supplier about plungers for example. It was about a Wooden shaft (80 grams) and a rubber suction cup (100 grams), how difficult could it be? The prices had indeed risen the past few months, but in comparison to 2 years ago, they had in fact gone down by about € 0.10. This insight proved valuable as we sell a substantial number of plungers. So, this insight saved us a lot of money. I believe in should costing and I am convinced that you get better results during a negotiation when you negotiate based on facts. The world is becoming more transparent and we gladly invite and help spread that development.

BOUWMAAT

BOUWMAAT is a large Dutch chain of stores selling construction and DIY related articles.

The Challenge

To be fair, we never really thought about the composition of a product. We know roughly what materials are of importance, but what the impact on a price is, was relatively unknown. I had the intention of getting the team of category managers to a higher level.

The Solution

At the launch of WTP we immediately hired an intern who started gathering data. Within no time we had broken down the costs of over 100 different products and that’s when the party started. I was curious as to whether a cost price breakdown would unearth anything with a large premium brand supplier like Knauf. After some research within WTP I concluded their margin was extremely high and that we were providing the sales against minimal compensation. This was enough reason for us to find out whether there was opportunity for creating a private label, and there most definitely was! By using insights, provided to us by WTP, we successfully developed a private label that allowed us to make a large margin. Within half a year the margin became over 40%. The profit within this category has now grown by €240.000. Only now do we know, in detail, what we are purchasing, and that insight provides us with a lot of opportunity. Especially concerning the annual price increases. We are prepared.

FETIM GROUP

Fetim is a wholesaler, dedicated to improve peoples houses. They sell decorative and constructive materials all over the world.

The Challenge

The main reason for us to start using WTP was because we found it challenging to reach a sufficient margin. Furthermore, the traditional way of negotiating was no longer effective. The lack of well-presented and accurate data is a big disadvantage during negotiations. All of these issues are solved by using WTP.

What I didn’t look forward to was how the bill of materials would be expanded and if this expansion would achieve the desired result. Additionally I also kept in mind the resistance some buyers would have against a new way of purchasing. Several buyers have a long history at the company and were not as willing to alter the standard way of buying. Even though many of them realise the current way isn’t working, they’ll attribute that to factors outside of their sphere of influence.

The Solution

Since I’ve started using the WTP software I’ve gained many insights into the separate sectors and the correct pricing within them. It has given me a huge advantage during negotiations with suppliers. Due to WTP we now focus on the cost price instead of the purchasing price. The insights give you a lot of authority and provide a different dimension to the negotiations. The suppliers can no longer get away with the way they currently conduct business by overcharging their customers. Once again, it’s been proven that knowledge is power.

In practice, I have gained a lot of positive experiences using WTP in just a brief amount of time. The first was with a floating shelf. The seller could not explain why I had to pay a lot more than the calculated cost price. Based on this they eventually lowered the price.

Another supplier announced they were raising their prices and they provided fact based arguments for everything they were raising the price of. I could however present all raw materials and exchange rate changes on a single sheet and by doing so I totally invalidated their analysis. This led to a large saving as the price increase was no longer valid according to their arguments.
The insight into EBIT and the influences of the fx-rate give a significant amount of negotiating power. The supplier cannot or is unwilling to explain why I should pay a lot more than the calculated cost price. Based on this the suppliers would eventually lower the original price.

Finally, I can help Sales substantiate any price increases for their customers. A clear overview in a graph about price mutations is very powerful and leads to conclusions you can barely argue against.

Every buyer (apart from our customers…) should work with WTP. It provides lots of insight whilst remaining extremely clear. I can use the graphs which are of importance to me whilst showcasing the periods that are relevant. The best thing is that everything is updated on a monthly basis and I always have the most up-to-date overviews at my disposal. Once a product has been entered everything happens automatically and during talks you can make use of the prints. The selection per vendor and the possibility to make prints of all aspects make WTP a really valuable tool. Which, just like all KPI’s, should become a standard to be used during all supplier negotiations.

Making a bill of materials is a fairly large task, but it gives you a huge sense of satisfaction once it’s been completed and the results are visible. We now have 1.762 products available in WTP! It also provides you with a lot of insight into the composition of an article and it makes it easier to manage a larger proportion of articles and groups of articles. I can most definitely recommend WTP. It is not a trick, it’s a new way to work, and that is cultivating into a cultural shift within the purchasing organization.

A national distributor of energy

The Challenge

We already followed the development of raw materials we buy, but we never had a structured approach to follow these developments. I was busy with a tender for buying cables, for which we contacted 4 different suppliers. We aimed to extend the contracts with our suppliers for 1 year. One of the suppliers pushed us for a serious price increase. Our challenge was to cope with that. We started working with the WTP should costing software.

The Solution

With the WTP should cost software we now have easy access to all of this data. Since then it became easy for us to see what is going on with all the different raw materials. Since we have all these data based insights I confronted this particular supplier with a WTP report and received a rather special and extraordinary reaction from him. He said to me: “Well, I am not particularly sure what’s going on, but what you are showing me appears to be fairly logical”. The result of this negotiation was that the price increase practically disappeared. That saved us a six-digit amount at the time. Without factual data based evidence I never would have achieved this result. Personally, I find it comforting to negotiate with fact-based information that WTP provides me, as it provides me with additional confidence.

 

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