Is Vendor Loyalty Always A Good Idea?
After building a sign business for over 10 years you come to realize that your vendors are your business partners – a key component to your success. But, all good relationships have bumps in the road – or occasionally need a spot check. Do you rely so heavily on one vendor that if something went wrong with your shipments your production & customers would suffer?
I am not saying that you should question the loyalty of your long-standing vendors, but you are in business to make the best decisions for your customers, employees, and company profitability…the “P” word. Don’t put vendor loyalty over profitability! OK, I said it! Now that we have the tough stuff out of the way let’s outline some simple steps to ensure your vendor relationships stay strong.
- Compare the prices of competitive suppliers (great customer service does have a premium, but not if the prices are 10% higher across the board).
- Order Catalogs from your vendor’s competitors and see if there are alternative materials that cost less without sacrificing quality.
- Go to your industry trade show and meet other vendors in your area – ask them to visit your shop and see what they can do to help improve your material ordering productivity (thru-put / “just-in-time” inventory controls).
- Order (and read) your industry magazines for new types of materials being introduced that might cost less and do a better job.
- Lastly, ask your current vendor to give you a list of materials you have ordered over the past 2 years. If your aluminum orders have doubled in 2 years then it is time to negotiate better pricing for that product, or an overall pricing reduction if your volume merits the adjustment. If you spent a 10% + increase over the previous year and you are trending up…time to negotiate points.
Bottom line – your loyal vendors are going to want to work with you to help you succeed. The sign shop that does 5 million in business is going to getter better pricing than the shop that produces 1 million, but if your vendor is truly your friend he/she is going to want to help you get there!
Happy Tracking,
Your Friend – Sign Guy Joe!