Case: Prognos Tailored – Digital tool for more efficient purchasing negotiations

Create the conditions for fact-based negotiations – it saves time and money.

The last two years have put a huge focus on buyers to understand what is happening with commodity prices. Are the price increases my supplier says correct? How can I obtain strong evidence to support the next negotiation? Where can I find more neutral price information? Do I have to accept all price increases to maintain a good relationship with my supplier?

For 40 years, Prognos has been working to provide strategic buyers in Sweden and other countries with fact-based information for negotiations. By digitising the process of preparing for negotiations, a company can strengthen its purchasing function to achieve much better results and at the same time save important time in the purchasing process.

Prognos continuously collects a large amount of cost data from many national and global sources and then helps companies so that they have the right information easily and digitally available. They also help to improve skills on indexes and cost information.

An exciting example - Steel price trends

- Suppliers' "price quotes" show prices have increased by more than 100% in 2021-22

- Neutral information shows that the real increase has been much lower (+50%)

- With access to cost data from multiple sources, companies can better understand what is happening with raw material prices, energy and other key costs.

Some key lessons:

- Many suppliers exaggerate cost increases in order to raise their prices more.

- Buyers are almost always at a significant disadvantage when it comes to accessing good cost information prior to a negotiation.

- Prices are often increased immediately when costs go up, but are not reduced sufficiently when costs go down.

- Many buyers do not have the time to obtain good cost data before a negotiation, but have to rely on what the supplier tells them.

- Many raw material prices have gone down since last spring. Have you received price reductions yet?.

- It is effective to understand the cost breakdown of what is being purchased and how all key costs change over time

- Fact-based negotiations are effective and save time

Read more here.