“Price is what you pay. Value is what you get.” According to Warren Buffett, anyway. Whilst we know that procurement decisions are at the heart of your operation, finding the right suppliers and striking the balance between cost and quality is a constant challenge. In this blog, we want to dive into a topic that we frequently encounter in our line of work: the battle between best price and best value.
The best price game
Let's face it; we all love a good deal. In the competitive world of procurement, securing the lowest price can seem like an immediate victory. After all, saving money upfront can be appealing to your bottom line. However, it's important to recognise that the best price isn't always synonymous with the best value.
The best value advantage
On the other hand, best value takes a more comprehensive view of procurement. It goes beyond the initial cost and considers the long-term impact of a purchasing decision. Here are some key factors to consider when aiming for the best value:
- Quality: Are you receiving high levels of service, and are your suppliers likely to continue this over the expected lifespan of the contract? In the long run, a supplier that is consistently performing against set objectives will save you many hours spent performance managing, amongst other unwarranted costs.
- Reliability: Can you depend on your supplier to consistently deliver on time and without disruptions? Reliability is a significant factor in minimising downtime and ensuring smooth operations.
- Innovation and technology: Does your supplier bring innovation and technology that can improve your processes or products? Sometimes, paying a premium for cutting-edge solutions can result in a competitive advantage.
- Risk mitigation: Do they have a track record of handling crises and disruptions effectively? Are they financially secure? In uncertain times, having a resilient supplier can be invaluable.
Striking the balance – who’s paying the price?
While the appeal of the lowest price is understandable, it's crucial to weigh it against any potential downsides. A supplier offering the best price might cut corners on quality, have unpredictable delivery times, or lack the support and expertise to deliver on their promises. The Association of Labour Providers are so concerned about who’s paying the price that they have launched the Fair’s Fair awareness and education programme, supporting the commercially sustainable procurement of agency labour so that it’s never workers that pay the price of poor purchasing practice. You can access their Fair Procurement of Agency Labour Toolkit here.
Best price versus the best value is a complex one
We get it, cost-saving measures are crucial for any business, but you can’t underestimate the value of investing in quality, long-term partnerships with your recruitment provider. In the industrial sector, efficiency and performance are paramount – and that means, in theory at least, the best value should outshine the appeal of scoring a bargain. Of course, your procurement decisions should align with your broader business goals and contribute to your organisation's success in the long run.
And when it comes to your recruitment procurement, if you’re looking for a supplier that offers both value and competitive pricing, with the reassurance of financial security and award-winning compliance, don't hesitate to reach out to us.