How can small businesses scope out the best suppliers?
The first step in supplier selection is understanding your customer needs and requirements in terms of product, service and service level expectations. The importance of thorough research really cannot be overstated and the ability of a given supplier to service the overall customer requirement is obviously paramount.
We spend a great deal of our time scoping the market capacity and capability for a given supply category, look for references within the industry and have a robust selection process that ensures they fulfil the necessary financial criteria as well as the ability to supply our customers.
In my experience, another good source of referral that is often overlooked by operators is in the competition. Do not be afraid of asking a select few competitors where they are sourcing products from as a starting point for finding new suppliers.
When we work with customers looking to switch suppliers, one of the most important things we stress is not to expect perfection from day one. Once you’ve made the change, allow time for both you and your suppliers to adapt to your business needs. At Beacon we can help with all elements of the implementation and change process.
How should small businesses approach new suppliers to get the best deals?
Outside of working with a purchasing partner such as Beacon, our advice would be to ask for a blind quote first and foremost on key lines that will be required, before beginning any price negotiations. Within this quote, be sure to include low value and low volume products so you are negotiating a comprehensive ‘price file’ that meets all of the hotel’s needs.
Remember, whilst a ten per cent saving on 70 per cent of what you purchase may be compelling, if the remaining 30 per cent increases by 20 per cent then there is no overall saving at all. Try to cover as many of your needs as possible during the negotiation stages to ensure the most accurate prices.
I would also recommend that in any negotiation on new supply you attempt to agree some longevity on the pricing you are being offered: There is always a price to beat your current price position in the market and many suppliers will invest in a price to win your business, only to hike it up shortly afterwards: This creates challenges for the purchaser who, after bedding in a new supplier, then faces the dilemma of moving again due to new margin pressures in their business due to price hikes. Beacon help with this as it is a key focus for us to try and negotiate stability for our customers.
What would be your advice to small businesses if they feel they aren’t getting the best from their suppliers?
Small businesses that are unhappy with the service from their supplier should firstly ask themselves why they are dissatisfied. Is it the price, the service, the sales representative, or is there simply a better offer available? Our advice to small businesses in this situation would be to meet with their existing suppliers, keeping all of the above questions in mind, and be completely open with their concerns, giving them the opportunity to resolve the issues. In our experience, this can often lead to some of the best supplier deals. Remember that any change in supply chain requires major thought with regards to the change management process, along with consideration for the wider reaching impact on the business.
Hans Ziebeck is director of purchasing at Beacon