Commentary & Analysis
Getting the Most Out of Vendor Relationships
There are many important relationships in business. Certainly, the customer relationship is critical. The employer - employee relationship is a key one as well. But one that is sometimes overlooked is the vendor relationship. At one time vendor relationships were seen as adversarial. Less was more when revealing information to your vendor about your operation. Then, when it came time to negotiate price, each side's goal was to get as much as possible.
By John G. Braceland
Published: April 30, 2010
There are many important relationships in business. Certainly, the customer relationship is critical. The employer - employee relationship is a key one as well. But one that is sometimes overlooked is the vendor relationship.
At one time vendor relationships were seen as adversarial. Less was more when revealing information to your vendor about your operation. Then, when it came time to negotiate price, each side's goal was to get as much as possible.
The total quality movement changed this thinking. Materials needed to come just-in-time. Quality had to be right the first time. Vendors needed to know more about your manufacturing flow to deliver the right product or specifications.
Today, things are even more complex. Instead of a separate prepress distributor, paper distributor, or pressroom products distributor, now graphic arts distributors are carrying plates, ink, and pressroom supplies. Paper merchants offer packaging, janitorial and other products as well as paper. Software, workflow and integration are all key elements in the digital age. Picking the right vendor is a real partnership.
Because most vendors have a much broader line of products and services make sure you are using everything your vendor has to offer. Sometimes the vendor's own sales people don't fully understand or sell all their products. Visit the vendor's web site and ask to be put on an email list for new product announcements and newsletters.
Many vendors offer free training or webinars to help educate your employees and customers about new technology or just the basics. Vendors may have product specialists or marketing people who are watching the trends and can help you decide where you want to go. Imagine having a group of customers come in for a lunch meeting with an industry expert, from one of your vendors, who speaks about how to get the best marketing response rates or the use of variable data.
Vendors now offer plant audits in various areas. Some of these are fee-for-service and some are at no charge, if you use enough of their products or services. Having someone from the outside take a look at your operation can often yield great improvements. Making sure you are getting optimal use or mileage from their products. When was the last time you had your stretch wrap machine adjusted to operate for the maximum pre-stretch or minimum number of wraps on a skid? Are you getting the best usage from your ink or plate chemistry? Is there ancillary equipment that can save you money, such as press wash recycling or fountain solution filters? Your vendor can be of valuable assistance in these areas. If they can't, maybe it's time to look for a vendor who can.
Some companies create only one touch point with the vendor. This may be at the purchasing or production level, although vendors have a wealth of expertise and depth at all levels of the organization. When was the last time a vendor's regional manager, vice president or president stopped in for a visit? These executives are looking for more customer interaction. As various management levels from your company interact with multiple levels from your vendor's company you will gain information, resources and opportunities. During these visits ask the vendor how you can help them lower their costs so they can pass the savings back to you. Using electronic ordering, consolidating shipments, eliminating or reducing rush orders can all bring down costs.
Purchasing decisions for major consumables and equipment need to be a team decision. Vendor selection goes beyond cost, quality and delivery. Most products and equipment need to fit into a complex system. Make sure that the team includes department head, plant manager, CFO, purchasing, information technology and an executive. The team needs to develop the decision making criteria and weighting before the first vendor submits their proposal.
Long term relationships and partnerships can be great. However, some companies have gone too far and never go out for bid or seriously entertain other vendors. Periodically it is a good idea to check market pricing with your contract. Also, you may test other products to compare performance. Develop some guidelines with your team about the cost of switching. If another vendor is 5% or 10% lower in price it may not be worth it to switch.
To help reduce costs and drive profitability, make sure you are getting the most out of your vendor relationships!