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How to Manage the Barrage of New Suppliers Knocking at Your Door January 1, 2010

Posted by solutionsbconsultants in Improving Personnel Performance, Increase Profitability, Procurement.
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I receive hundreds of solicitations “to buy” every week. Some are directed to me, others are forwarded to me by clients. The amount of time required to answer phone, cell and email solicitations is significant. Fortunately, the solution to this barrage requires little in the way of resources and time. I implemented this idea in several engagements and in each case it was monumental in payback. Try this method and save hundreds of staff hours each year.

Every Tuesday, we institute “Open Vendor Day”. Actually, we put aside one or two hours depending on response and had a procurement staff member (we rotate between everyone in the department) conduct five minute meetings with potential suppliers. The format was simple and was given out to the suppliers in advance so that they would not be caught off guard. This technique was conducted on an “in-person” or “conference call” basis depending on the supplier’s location.

Here is what we ask:

1) What products/services do you sell?
2) What is your company’s competitive advantage (i.e. what can you do that others can’t or won’t)?
3) How is this going to benefit my company – what’s in it for me? (i.e. streamline process, cost savings or avoidance, value add, etc.)
4) We expect a proof-of-concept or a “try before we buy” before we will do business with any new supplier and we prefer a transparent relationship – do you have the resources and willingness to do this.
5) Provide us a price list of services and recommendations from other satisfied clients.

Yes, there are a lot of other great procurement/purchasing questions, but we really wanted to keep the meetings short and productive. This is why we sent the questions out before the meeting along with the assigned call-in time. While we could have sent the questions via e-mail, I have found that personal communication is important to gauge the knowledge, sincerity, and culture of the supplier, and it is key for relationship building which, as you know, is the cornerstone of all successful supplier relationships.

Call-in times were actually scheduled 10 minutes apart to allow for time overages and note-taking.

Suppliers that survived this gauntlet would then be invited back for a more in-depth discussion with the appropriate category buyer. It should also be noted that suppliers love this idea. Oftentimes, new suppliers have no way to reach a decision-maker in your company. On more than one occasion, we were able to speak to suppliers who had been previously blocked and whose services we desperately needed – a true win-win.

Remember what the Aberdeen Group says……….

“For a typical enterprise, it takes an increase
of $5 in sales to equal the impact of
a $1 reduction in procurement costs.”

If you have a topic of interest you would like me to discuss in our blog, “in-person”, or see a typo, just send me a comment or email me directly. I would like to hear from you!

Respectfully,

Steve Gordon
Senior Consultant
Solutions Business Consultants
http://www.costavoidance.org
__________________________________
”Bringing Service, Value, and Efficiency to the Supply Chain”

steve@costavoidance.org
(865) 356-3575
Skype: stevegordskype
Blog: https://innovativeconsultant.wordpress.com/
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