When it comes to trimming down waste in a business, one area managers often look to first is their supplier list.
Lean leaders can often boost a business’s bottom line simply by re-examining vendor contracts. It’s a good practice to revisit agreements written more than a couple of years ago anyway, but doing some research can result in better service for a better price.
Take some time to do a little homework and shop around. Gather several quotes, at least three, from competing companies within the same industry. And if you think you’re paying too much for your current supplier, have a meeting with your supplier to attempt to negotiate a new contract.
But be careful not to choose a vendor solely based on price. As many of us know, a cheaper quote doesn’t necessarily translate to better service. Fast Company uses a similar example to illustrate one issue lean managers face when they focus on cash opposed to costs. A manager researches vendor options and chooses the one that’s cheapest rather than offering the contract to the one with the highest-quality products and most responsive service. This type of short-term decision making “burdens your company with unnecessary cash spends — and the chances are, you yourself are rewarding your managers for making your company slower and fatter on the fiction that they’re ‘reducing costs.’”
Cutting corners doesn’t mean cutting to the bone. It simply means taking a hard look at the entire supply chain and making smart changes that don’t impact the quality of your service/product.
