Manage your suppliers to reduce costs and waste. Get your suppliers on-side and maximize profit.
How do you get along with your suppliers? Is your relationship adversarial or co-operative, or somewhere in between? A good supplier is worth more than their weight in gold. Remember, open communication must flow in both directions.
A number of years ago, I took over as corporate purchaser for a mid- to large-sized company. Among other supplier challenges, we were having trouble with a key supplier. As the new guy on the block, I meet with the sales rep and his boss on a number of occasions and expressed our need for delivery six days a week and not their pre-determined three or four. We were getting too much product at a time and it was difficult to store and control our high stock turnover rates while managing with a restricted storage space. We went back and forth for about three months with no change. I contacted their competitors, who were more than happy to deliver six days a week and at a lower price; 7% lower! It worked out to almost $12,000 a year in savings and I had the delivery schedule that met my company’s needs, plus the supplier rotated the stock on delivery to maintain FIFO (First in – First Out) and credited us for older potentially dated inventory they took back as returns. It was a winning solution for all but the old supplier! The old supplier’s response when we dropped them? ‘We didn’t realize it was important to you!’ WOW: after three months of talking about it you would have thought they would have clued in!
Make sure you keep that communication wide open so that the relationship works in everyone’s best interest. Keep asking questions until you get the answers you need. If they aren’t forthcoming, maybe it’s time to move on to a new supplier.
Mike has worked across Canada as a food and beverage professional and currently divides his time between writing and teaching people how to start and run their own businesses.