Saturday, March 21, 2009

Cost Cutting with Vendors

Lately I have been reading a lot of stories in the press about how to squeeze every last drop of blood out of every supplier because, we are after all, in a recession. During these economic times, companies are asking suppliers to take price cuts with no concessions just because they need to cut costs.
This is an unproductive approach. I understand the need to cut costs, but this must be done in the spirit of a trade. To preserve the long-term relationship with your supplier, you must focus on keeping the economic balance between both parties. This can be done through trading for something of value.
If you want your current suppliers to cut costs, then offer a free-to-you concession such as endorsing them to your colleagues in other divisions or other companies. Or how about sponsoring them for a speaker’s slot at the next NAPM Round Table? These things are free to you, but can be quite valuable to your vendor.
Focus on trading for something that’s valuable to your vendor and that will ease the pain of a price concession. Let’s help each other through these tough times.