2 Questions To Unlock Better Pricing, and Lead Times From Vendors

Each purchaser has their own set of tasks, duties and deliverables that are unique to the company they work for.  So what then could be two universally applied golden questions to ask parts vendors? What two questions could unlock better pricing, reduced lead times, and greater relationships?

A clue… It’s not about certifications or capabilities.  You’ve surely covered that.  It’s about the vendor’s efficiencies…

The 1st Question:

 “How can we better match & support your buying, set-up, and cost efficiencies when we order from you, in order to get a better: price, lead-time, etc.?”

This question may seem to turn the customer relationship on it’s head, where now you are asking what you can do for the Vendor.  While it is true that you are offering to align yourself and support them with your actions, you are finally getting closer to what you want in the relationship by defining the variables that go into the Vendor quoting and operations.  Every customer wants reduced costs & lead times, and greater quality and predictability from their vendors.  Not many customers are willing to learn how to speak the vendors language and help the vendor be as efficient as possible through understanding and ordering in efficient ways that support the Vendors efficiencies and economies.

“The way it’s always been done” and the order quantity that “so-and-so always ordered” before you came along isn’t necessarily doing you or the vendor any favors.   When I was purchasing, I found this question unlocked some unsettling truths.  The company I worked for had “always” ordered 10,000 pieces  per PO from a metals vendor.  In response to the question, the vendor explained that the way they ordered raw material and ran it meant that they always had to over-run parts on our orders due to only getting 8000 parts out of each run before changing over the raw material handling and feeds. Thus our 10,000 piece purchase order meant they would have two set-ups and have to sit on some of our stock until our next order.  By ordering 8000 at a go we could avoid a whole set-up and get a slightly better rate per part since the vendor didn’t have to go through the warehousing and extra tasks of holding parts for us.  In other cases, we found by increasing our order quantities we could allow our vendors better efficiencies that were able to be enjoyed by both the Vendor and us in cost savings and reduced lead times.

The 2nd Question:

“Are there any of our demands, specifications, and requirements that are a rub, or difficult for you?”

Without some reassurance, this question may make the vendor feel a bit unsafe, and hesitant to show an apparent weakness.  They will be likely to open up, if you can assure them you are simply looking to understand, and that you are trying to remove any unnecessary obstacles for them in return for better costs, predictability, quality etc.

Some answers may not surprise you and may still be nonnegotiable such as a tight part tolerance that you need to uphold.  You may be surprised however, to find there may assumptions in the relationship and requirements or even some tolerances that are negotiable.  An example could be the part packaging & shipping requirements.  Without a discussion on expectations and requirements for shipping parts, a vendor may default to their standard or to an assumption of “what has always been done”.   You and the vendor may assume that since your previous vendor always shipped the parts by parcel, that the new vendor must match the parcel and packaging expectation.  Perhaps after talking with the vendor and asking this question, you both get on the same page that the vendor can utilize LTL or parcel depending on the item and costs. Or perhaps there are tolerances on a “non-working face” of the part that could be loosened in order to save time and money such as chrome surface specs in areas where needed versus the entire part or rough milled surface in areas that do not require finishing.  Exploring this together could help both of you save time and money and increase the value of the relationship.

The vendor and customer relationship doesn’t have to be difficult or mysterious.  As a contract manufacturer, Jetool makes parts to your specs. It’s critical to define expectations early on in a relationship, and then in regular reviews as Jetool and customer operations can change over time.  The vendor and Purchaser both improve their positions by working together to define and seek alignment of efficiencies up and downstream.

Jetool – Joel Soelberg