Increase Your Buying Clout!

by Roger M. Hunsberger

In today's market climate of tight supply and razor sharp price competition, a progran approach to purchasing can often secure for medium and small size finns competitive arrangements similar to those obtained by large national home center chains.

When it's time to review a product line, assess your needs in advance and spread the word among potential vendors that a new oppornrnity is developing at your business. Also give current suppliers sufficient notice to bid on your new requirements. Historically, if quality and service have been excellent with a strong relationship, a program renegotiated with current parmers can be your best bet.

Learn what each prospective supplier will offer for both current volume and anticipated growth. Discuss point of purchase literature, videos, display racks, employee training sessions and materials in addition to traditional quantity pricing and advertis- ing co-op dollars. You probably can obtain first right of refusal on any new products the vendor may develop with return crcdits for test marketing the item. Value-added services such as quick shipping of limited quantities at program pricing may also be available. Critically examine all costs relevant to putting in a new progran or altering an existing one, including s[orage and handlhg, damage potential and liability.

If you will be in competition with similar items, pay close attention to advertising, quality of packaging and depth of line already present in the field. These determine the level at which you must compete and can indicate significant costs that could reduce profi table performance.

Be flexible in demands and open to alternative suggestions. Often a vendor is able to provide services or other items that result in a real competitive advantage for you.

As discussions progress, allow sufficient time to evaluate data and make a smooth transition from current buying methods to the new program. For a program with lasting value, benefits must be rrutual for both you and the supplier.

Be careful not to pick the program apart. A prinury compliaint from suppliers is having a good faith proposal for a total program accepted, only to receive pafiial orders for one or two low margin items. The hard feelings created negate the efficiency inherent in having fewer suppliers. Another side of "splitting" the program is loss of a close relationship opening new opportunities for profits.

Review a purchasing program every six to 12 months to fine tune and increase its strength. Both partners should feel comfortable suggesting ways to improve service as well as discussing problems"

Quality service and reliability should be decisive factors in choosing a program. Product must be on your shelf in a timely manner and in sufficient quantity for you to operate at an acceptable margin of profit. A program approach to purchasing often plays a major role in achieving this result.