Procurement 29 September 2016

Navigating a complex IT supply chain

IT supply chain
Experts advise that margins paid on IT equipment should exceed no more than three per cent of the trade price
The IT market is like a continual conveyor belt with hundreds, if not thousands, of new products entering the market each day. For SMEs and entrepreneurs who may not have a dedicated procurement department, navigating this complex IT supply chain is no easy feat. It requires knowledge of trends and an understanding of what to prioritise.

Faced with shrinking budgets, businesses need to be smarter when it comes to tech purchases. Yet, despite the best of intentions, organisations can unwittingly end up paying more than is needed on everyday IT equipment. This is because suppliers often take advantage of a lack of clarity in the market to insert a large mark-up on the products they are selling. The extraordinary levels that some suppliers charge are revealed annually in the KnowledgeBus? IT Margins Benchmarking Study.

According to The Society of IT Managers (SOCITM) the margins paid on IT equipment should exceed no more than threeper centof the trade price. Yet the IT Margins Benchmarking survey shows that, in extreme cases, suppliers are charging organisations mark-ups which are almost 11 times higher than the trade price.

With every business keen to achieve growth, why are we still throwing money away when it comes to IT purchases?

Navigating a complex IT supply chain

To be confident that you’re getting the best price for IT products it requires you to consider several elements at any one time. Alongside supply chain factors, such as overseas delivery charges, geopolitical issues, like Brexit, are unknown variants that make exchange rates, and therefore import prices, difficult to predict.

With prices jumping up and down on a daily basis, it can be near impossible to keep track of the best price. You could easily while away several hours scouring the internet, requesting several quotes before analysing the data, only for things to change the next day. Buyers need to be wary of these changes and the potential impact on prices, from both positive and negative perspectives.

Watch out for the small purchases

As manually benchmarking technology prices is so time consuming, it usually only happens with high-value or bulk orders where inflated margins could result in thousands of pounds? worth of additional cost. it’s easy to see why teams may invest more time on these larger purchases the consequences appear much greater, and the procurement teams face more intense scrutiny accordingly.


 
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