and how Briza Scientific would help you avoid them
Manufacturers in Europe, the USA, China, and India usually do not have the capacity to do direct sales, and especially for Africa, then would work through an intermediary. It makes sense, and the skills and knowledge required for making ovens, centrifuges, biosafety cabinets, or freeze dryers, are in no way related to the skills and knowledge involved with import, export, and shipping. The logistics and accompanying sales functions are therefore left to a distribution specialist company. Whether you want to procure equipment for your laboratory in West Africa, East Africa, Central Africa, or Southern Africa you are no doubt going to have to deal with the same kind of business. The distributor.
Here are four (4) mistakes that these suppliers often rely on you making:
- Thinking Price and Cost are the same thing.
The unit price an item is sold at is often inversely proportional to the maintenance and repair cost, the functionality, or the throughput of the unit. Without considering anything else, the unit price is not enough to determine the real cost of running, maintaining, repairing, or replacing the unit.
We recommend you always ask:
- What is the warranty period on this item? Assume that the instrument will start costing you money to keep running after this period.
- What throughput can I achieve during this warranty period, and what will my machine operating cost be per day, or per sample, or any other unit of measure.
- Can I run more than one application on a device and if so, how does that device cost compare to buying multiple devices?
- What is the running cost in terms of consumables?
- What is the power rating of the device?
- Would I also need to acquire a UPS?
Only after considering all these factors along with the price of the item, can the real cost be determined.
2. The tortoise vs the hare.
Often a procurement decision is predicated on product availability. Obviously when operational requirements dictate that supply urgency is of paramount importance. The hare wins in the short term, but remember that the longer the race, the stronger the tortoise performs.
Not every supplier can keep stock in this economy. That does not reflect on that supplier’s honesty, reliability, quality, or aftersales value. It is in your best interest as the customer to have supply options and to engage the maximum amount of suppliers so that the forces of the free market get you the best value at the least cost.
The best way to do this is to forecast. Forecasting your laboratory needs requires a clear understanding of your operations with a current, historic, and planned view (knowing what you’ve done, what you’re doing, and what you plan on doing).
There are many ways to do this, and at Briza Scientific we can assist here, but the most important takeaway here is that it is critical to do, to enable your supplier base to prepare in time so that they maximum number of them are in a position to compete for your business with you need to procure.
3. The Medusa effect.
Just like the monstrous Gorgon in Greek mythology, some suppliers want to freeze you in stone. It is in their best interest that you become so reliant on them that you are irrevocably restricted to their catalog and the brands that they can supply.
To be honest, this is not always bad. In a healthy commercial relationship what is in the best interest of one party is not by definition against the best interest of the other. Also, brand loyalty can work in your favor regarding spare parts, the experience and knowledge to troubleshoot or repair older units, etc.
What is not in your best interest is the idea of one supplier monopolizing your supply chain. This perpetuates a relationship where the buyer remains ignorant of the larger market available to them, to the sole benefit of the one supplier alone.
Do not fool yourself, if you are a scientist, lecturer, researcher, or QC manager, as much as it is tempting, it’s not in your best interest to accept a supplier saying “We worry about the business side of things so you can worry about the science”.
That is a fallacy. If you are a scientist, you are also a consumer. A customer. You are a critical part of the business equation, and the entire reason the marketplace exists. Therefore, do the due diligence, and keep looking at who is up and coming in the market. You already keep yourself abreast of the technical trends in the industry, just expand that thinking to the commercial side too.
You are not exempt because your organization has a centralized procurement office. Procurement officers will never have the product knowledge of the commodity, nor the insight into the industry you can have. For the most part, procurement offices only prioritize the organization’s policies and do not advocate for changes to the policy to exploit opportunities in the market at large.
4. Ignorance about your Incoterms®
This is the simplest but most heart-breaking mistake that you can make, not because your supplier is likely to exploit your ignorance, but you leave yourself vulnerable to false expectations.
Incoterms (or International Commercial Terms) are a series of pre-defined commercial terms published by the International Chamber of Commerce that are widely used in International commercial transactions or procurement processes.
These dictate the transfer of risk and the point at which delivery is legally considered complete. There is some detail to know here, that we can discuss in a consultation, but as a customer, you need to be sure your quote indicated the Incoterm and corresponding place of delivery, Eg.
Accra Airport, Ghana,
CPT for instance is the incoterm Carriage Paid To Accra Airport, which in this example means, the supplier is flying a shipment into Accra, Ghana. It will need to be collected at the airport and cleared at customs by the client’s clearing agent, and delivery to the client’s door is for the client to arrange. It also means that the supplier’s risk ends at delivery to the airport. Only damages that were clearly sustained during transit before arrival at the airport and appropriately documented for evidence, would be for the supplier to remedy.
In contrast, a DAP Accra Airport incoterm shipment would look exactly the same, but damages in transit will be the client’s risk.
Check out the incoterms here: https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-2020/
If you have any questions or comments on the above or need any help on how to implement any of these suggestions, please do not hesitate to contact us here, https://brizascientific.com/contact/ for consultation and advice.