The AOP Buyer Power Score is a new content offering created in partnership with ProcurementIQ that rates the balance of power between buyers and sellers for a particular spend category.
Today we are reviewing metal cans.
The Numbers
The Buyer Power Score for metal cans is -1.8 on a scale of -5 to 5, with -5 signifying low buyer power and 5 meaning high buyer power. The more power a buyer has the greater leverage they have to get lower prices and better contract terms.
This Buyer Power Score is a clear ‘Buy Later’ recommendation. Predominantly driven by current market pricing for aluminum, steel, and labor, the price trend from 2019-2022 is up by 11%, a significant cost increase that is not expected to abate until next year. According to the Procurement IQ category report, “Co-chief executive officer of Monster Beverage Corp., Hilton Schlosberg, revealed in January 2022 that the company has seen aluminum price increases of nearly 60.0% in the past year, causing the company’s input costs and prices to rise. Monster is considering another price hike in the coming months.”
How to Use this Information
While the “Buy Later” recommendation is clearly justified, companies can not always wait to source and buy specific products and materials. Procurement should engage in collaborative discussions with the business to determine whether substitute products (such as composite metal cans, plastic, or glass) are viable alternatives. If not, it may be possible to mitigate the overall cost impact to the company by carrying lower inventory, signing shorter term contracts, and delaying purchases as long as possible.
Dig Deeper
We have partnered with ProcurementIQ to dig into their treasure trove of over 1,000 indirect category intelligence reports, with new insights every Friday. To dig deeper into the retail store fixtures category, click here.
