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Outbid again? How to analyze that lost order.

Article Excerpt
Editor's note: This is the second in a three part series on purchasing strategies. In last month's issue, the author explained why it is virtually impossible for a service center to sustain a long-term cost advantage over the competition. In this article, he describes the factors that can lead to a lost sale. Next month, he analyzes the tradeoff between buying in larger quantities and reducing inventory turns.

Your sales department reports it has lost another order to its arch nemesis. Feedback from the customer seems to indicate he paid a significantly lower price than your company offered him. "Why is it that they always beat our price, especially at this customer?" laments your sales team.

Assuming this customer buys some metal from your competitor, and some from you, how can you increase your share? It may be helpful to analyze why your rival was able to outprice you on the last few orders. It was probably for one of the following reasons:

* They have excess inventory--in that item or all items.

* They bought that item better.

* They need cash.

* Prices are falling.

* They made a mistake.

* They are reacting to their last lost order.

* They perceive a shift in the market.

* They cost their inventory differently than you do.

* The customer didn't tell you the whole...

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