GPI 216 – Ask vendors how to save money on your purchases from them. Then wait.

Call your vendor in and ask him to tell you how you, the buyer, are causing the price of his goods or services to be higher than necessary.  He is the expert on what he sells to you so put the onus on him to tell you how to save money.  Think about these ideas to make him think of all those things not normally considered.  You want to cut your costs so keep an open mind.  Review these ideas.

Things to ask your vendor to save your company money:

1. Am I not buying enough to get a price break?
2. Am I buying a broken quantity (split pallets, half truckloads)?
3. Am I buying at the wrong time (Grapes in December, corn in January)?
4. Is the item I insisted you make for me per my instructions over-engineered?  What can I do about the material I dictated initially to you?  Should we try something else, an alternative or substitute?
5. Do I need to drop my defined packaging and strap the product bare to a recycled wood pallet?
6. Can I save 35% if I buy in bulk twice per year versus placing tedious monthly shipments?
7. Did I dictate a type of material that is technically overkill and twice the price?  Tell me where I am going wrong with my order.  Give me some ideas to contemplate.
8. Maybe I need to let you, the vendor, redesign the item I am buying?  Do you have ideas that will cut this cost?  When I spoke to another competing company of yours, they told me they would redesign my product to reduce the cost.  We have been doing business a long time so I feel it is only right to ask you first.
9. Maybe if I buy more items from you, the vendor, and consolidate my purchases with you, you can save me money on this item as well as the others?
10. Maybe if I pay your invoice to you, the vendor, earlier than the normal 45 to 50 days, you can offer a substantial early payment discount and save me money?  (i.e. Substantial meaning greater than the normal 2%)
11. Maybe I should consider buying your company, my current vendor?  I am going to think about this one by myself first.
12. Maybe I should consider hiring you and putting you on my payroll, the vendor’s representative, since you know the market well and you are currently buying $50M (example) of this type of material per year and I sense you know a lot more about this product than me?
13. If I pay you, are you capable of redesigning this product that I am currently buying from you in order to lower its cost 10-15 or 20% from now going forward?  Can you reconsider if I change the guarantee from 600 units to 6,000 units per year?

Try putting the onus on your vendor.   There are a lot of ideas to consider when dealing with the vendor.  Ask the vendor to go back to his management group and rethink what you are currently buying and come up with some proposals that will benefit both you and his firm.

Talk to a new face.  Last safe suggestion:  Get another bid. Go to another vendor if you do not get a good answer from your current one.  One last suggestion for purchasing that always brings things into clear perspective is to get another bid.  Involve another firm and get a different perspective.  Go through this same list of questions for nearly everything you buy and you will make good progress.  Let the vendors come up with ideas.  Your vendors are far more sharp about the items you buy from them, so allow them to help you out when you give them more business.