How Bygma uses ABC Cloud to master supplier negotiations

Good business acumen and foresight have made Bygma Group one of the largest suppliers of construction materials, with a turnover of DKK 7.9 billion. Here, Purchasing Manager Preben Nielsen and Purchaser Fredrik Stuhr Pedersen explain why supplier negotiation is one of the keys to this success, and how Bygma chose to adopt new methods.

A lack of overview and Excel gymnastics

“We had a clear desire to get an overview of where we needed to invest our energy and resources when it came to supplier negotiations. We probably got stuck in a routine where we spent far too much time negotiating for goods which did not offer great value.”

“Before we got ABC Cloud, we collected data from various tools and then had to paste multiple Excel sheets together to get an overview. However, we have a very large amount of data, and if we made the extraction and identified a need for more information in the material, generating new data was time-consuming.”

ABC as a tool in supplier negotiations

“We use it a lot when we negotiate with our suppliers. 2017 was the first ’supplier loop’ when we used the platform for that purpose. There, we focused a lot on AA products, where we explained to our suppliers why these particular item numbers were our most important ones. It was important to achieve a common understanding of i.a. which products they should never run out of.”

“This year, our focus has been very different from supplier to supplier. Now, we know what we get out of ABC, and we know the effects of establishing common understanding with suppliers. We continually review our range per supplier based on ABC.”

“We have created visibility which means that our demands are accommodated to a much greater extent,” explains Purchasing Manager Preben Nielsen.

The result

“The increased focus on items that are slow to sell means that we have actually improved our level of service, while our inventory investment has gone down. And if we look at the work we put in versus the cost of ABC Cloud, the bottom line has a plus, too.”

“We did not have these expectations of the platform when we started. We had the expectation that we would get some specific results but have been pleasantly surprised by the high efficiency of the tool.”

Read the full interview with Purchasing Manager Preben Nielsen and Purchaser Fredrik Stuhr Pedersen here. Bygma strengthens its negotiating position and secures bottom-line results.