Vendors and Suppliers :
Vendors and suppliers are an important group for any business. Their customers often undervalue them which is a mistake made by the customers.
Vendors and suppliers, and their sales people, are like bees between the flowers. They call broadly on your industry and know a lot if you choose to mine the information. They can also deliver better prices, terms, and products if you tune into the opportunities they present you.
The question is how to best correspond with these valued partners?
Three Rules :
· Use the Request section to develop your correspondence.
· Consider the Sales section to invite their emotional support, which can lead to much lower prices and better service.
· Solicit their input, which is best done by email or phone.
If you get a chance can you give me a call or drop me a note about how you see the opening price point players in our market place that we compete with. Wanted to get your input into what we should be thinking about.
Note that sending out informal emails can solicit a gold mine of information. You have to pick and choose between those suppliers and their representatives who enjoy this and those that avoid it out of perhaps undue conservatism.
Now that our volume is exceeding 10,000 units per month, can you suggest ways we can reduce our price from you by buying, assorting, or otherwise altering our purchasing behavior to help you reduce your costs so we can get a lower cost?
All ideas welcome. Perhaps you can talk to your operations people about ideas they may have.
These are just two examples of seeking supplier help. Their operations people often know ways you can reduce your costs by letting them operate more efficiently such as longer lead times, firm orders in advance, annual commitments, larger order sizes, and so on and so on. Ask, you may be surprised by what you hear.
Some of the things my companies benefited from as a result :
· At the Umbroller stroller company, we cut aluminum tubing costs 40% by buying their standard 33" length tube which we cut up at our factory rather than have them do it. It took a lot of pressure to get the sales guy to contact his factory tosee what would work best. Once he did, we both benefited substantially from the result.
· At American Power, we adapted to the exact QC and costing procedures of the supplier's program with Digital Equipment and offered to pay them 5% more since we weren't Digital. We saved 11%.
· At Simply Magazine, we ordered 15,000 CDs per title not 10,000 and got a significant reduction. It turned out at this supplier upping the order to 20,000 each wouldn't have reduced the price any further. So we found the sweet spot and saved 6%.
Keep asking. Emails are a nice way to do it because they can forward them easily to their operations people. Few people consult a supplier's operations people so they usually welcome being included and, at a minimum, simply treat you better since you consulted them. We do the same with any retailer who bothers to consult with us to save us time, process and costs.
Vendors and Suppliers
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