When to Revisit Your Vendor Pricing and Relationship – Ensuring You Get the Best Price
Vendors are your security blanket when it comes to offering products to your customers. They are there when supply and demand rises, offering the products in a timely fashion and at the best prices so your company can stay in the black when it comes to operational expenses and sales profits. Building on a strong vendor relationship allows you to define the expectations you will have with the vendor and successfully manage your sourcing so those products flow unimpeded to their final destination.
Yet good things don’t always last forever. Every company experiences change. This change may be caused by the fluctuating market, the growth of the company, changing product lines and a host of other reasons. Sometimes those changes can affect the relationship you have with the vendor and the prices that you are paying for products. When changes occur, it is always a good idea to revisit your vendor pricing and relationship so you are getting the products you want at the best prices you can afford.
Factors for Revisiting a Vendor Contract
Every business is different and will have a different type of vendor contract set up that is in the best interests for both parties involved. Yet here are some common factors for revisiting a vendor pricing contract and evaluating the relationship you have with them. You should also develop your own set of guidelines and metrics to use for your vendor management practices so you are evaluating your vendor contract at the right times. Some pricing contracts can’t be changed or modified until it is time to renew them. Always review the contract terms before initially signing it to see when modifications can be made to vendor pricing.
Increased Product Line
Your business may have become such a success that you have decided to increase the number of offered products. Revisiting your vendor contract and relationship can help you determine if the vendor can offer the additional products to you at the specified time frame, and what types of deals they can provide. You may be able to get a great bundle deal from your vendor that no other supplier can offer.
Product quality has an important influence on prices. If the product quality has decreased while your prices are slowly rising, it’s time to take a hard look at your vendor relationship. You don’t have to tell your vendor that you are looking elsewhere for products (in fact, you shouldn’t play this bargaining game). Instead compare products and pricing to find out if you are getting the best for your money in both quality and price.
Supply Management Issues
Supply chain management can experience bumps in the road that can affect when your customers receive their products. If there are problems on when your vendor is shipping out products to your company, then it is time to get in contact with your vendor and communicate your concerns. It’s not a time to browbeat the vendor for any mistakes because mistakes can happen to anyone. It is time to strengthen relationships and define objectives to come up with answers that can fix the current issues.
Product costs will increase and decrease based on the fluctuating market. Yet you want to ensure that if there are product price increases, there is an acceptable reason for this increase that can justify the reasons to shell out more money. Having RFP software to collect data, analyze vendor reports and compare pricing will allow you figure out if the cost increase from the vendor is acceptable.
Maintaining a vendor relationship is a valuable asset but making sure you are remaining competitively priced is equally valuable to your customers. Knowing the strategic moments when asking your vendor for better prices will ensure you are not risking damaging the relationship you and your vendor have established. What are some strategies you have seen to make sure you are getting the prices you want and not alienating your vendors in the process?