Written By: Dian Gunderman, EVP of Technology Procurement Services at Green Cabbage
Did you know that most large technology suppliers and value-added resellers have seen increased profit margins since the pandemic? Even while some earnings are down, their profits have continued to climb. According to Macrotrends.net, top technology suppliers gross profit margin for the twelve months ending September 30, 2022, was over $32B, an increase in over 17% year over year. While another showed a 35% profit increase over the same period.
While suppliers and resellers have hit us all with cost increases, citing continued supply chain disruptions and geopolitical and inflationary environments, Procurement teams have been forced to cut corners and lean heavily on supplier relationships to reduce costs wherever they can.
Now more than ever, Procurement teams need be doing more due diligence, not less, to ensure they are getting not only a fair deal, but a good one. Procurement teams often rely on past purchases as the gauge in which to measure cost savings. Comparing current quotes or invoices against historical spend and negotiating the costs down, walking away feeling good that they got a fair price, but how are teams to know if they received a competitive price to begin with? The answer… through credible benchmarking, yet so few procurement teams have the data, expertise, or resources to do this.
Benchmarking spends against current markets on like-for-like products is the best way to measure whether your suppliers are offering you their best deals. Knowing what suppliers are offering compared to your competitors, which have the highest mark-ups and deepest margins, and which levers you can pull all have a significant impact on your organization’s bottom line.
Want to learn more, click below to see if one of your upcoming agreements qualifies for a no-cost proof of value benchmark!