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Well, not always. Personally and professionally I don't optimize for expense alone (often the wrong KPI) but the ratio of value / expense, subject to constraint
by wenc 7y ago
Well, not always. Personally and professionally I don't optimize for expense alone (often the wrong KPI) but the ratio of value / expense, subject to constraints around expense, cash flow and specifications.
If you optimize for expense alone, you can get things for cheap but you trade off other things like quality and time. Also, ensuring business continuity for good suppliers is an important KPI -- and if you don't take care, in the end you'll end up with only bad suppliers where it's a race to the bottom and everyone loses.
- gav 7y agoOn that second point it's important to differentiate one-off or recurring items. It's great to beat up a car salesman as you'll likely never see them again, but not somebody that provides a critical service, say IT support. I used to work for somebody who would negotiate until the other side wasn't making any money, and I'd talk to vendors who'd lost money dealing with us. No surprise that they would be attempting the minimum required to get paid.