Dealing with suppliers can sometimes be very difficult.
Is your company getting the best price? Will they hold stock for you? These are two questions, among many others, that you may need to consider as a business.
The good news is, there are some simple factors and strategies that will help you get the best deal from your suppliers.
1.
Negotiating favourable stocking agreements: The best suppliers can not only keep your company cost competitive for parts and materials, but also lower your inventory holding costs.
Keeping inventory is one of the biggest costs for companies.
It ties up cash in parts and materials that could otherwise be used in other parts of the business.
So, how does that perfect supplier help reduce these costs? The answer lies in negotiating stocking agreements that help to lower your monthly inventory holding costs.
When your suppliers are willing to hold inventory, it guarantees that you'll only take that product when you need it.
This reduces holding costs and the possibility of damage to your inventory while it's in your warehouse.
2.
Understand the market your purchase in: Perhaps your greatest asset is your company's ability to be as knowledgeable about market pricing as your supplier is.
When you ensure that your suppliers are always competing for your business, you gather multiple sources on market pricing.
Keeping all your business with one vendor, will force your company to operate in a vacuum, where your pricing will never be in line with the market.
As a customer, you must understand the market you purchase in, as much as the sales people who sell to your company.
3.
Always reward hard work: If a supplier comes to the table with an aggressive price, and beats their competition, there is absolutely no reason why they shouldn't win your business.
Sales people rely upon management to give the approval on pricing offers.
When a supplier goes out of their way to make an aggressive bid, there is always a sales person responsible for fighting to get that price approved.
Not rewarding their hard work only means it will become that much more difficult for that sales person to get aggressive pricing in the future.
4.
Follow up threats with real action: Sales professionals look for cracks in a customer's armour.
They look for signs that threats aren't real.
If customers complain too much, their complaints won't produce the desired results.
Your company must match your threats with real action.
This means that if an issue is not resolved to your satisfaction, then you must make it clear what the consequences of it happening again means to both your business, and your vendor's business.
This is not about closing the door and never working with that supplier again.
However, it is about letting them know that your actions speak louder than words.
How you manage your supplier's performance will depend upon how you deal with them as people.
If you spend your time yelling and screaming, simply for the sake of complaining, it will never produce the results you are looking for.
Suppliers will simply tell you what you want to hear, and that in no way helps your company.
Allow your volume of business, professionalism, and common sense, to dictate how you manage your suppliers.
In the end, it will keep your company right in the middle of the market, always receiving the best service.