Big Picture - May 2016 - (Page 16)
business + management
Managing Your
Distribution Chain
Establishing and maintaining positive relationships with your suppliers leads to a
successful workflow. | by Marty McGhie
BIG PICTURE
May 2016
A
s a business owner, one of your biggest
headaches can be trying to manage things that
you may not have complete control over, such
as the various distribution networks of your
business: raw goods suppliers, outsource
suppliers, and shipping and logistics providers.
Supply chain management can be a very complex business
operations process. But perhaps the most critical part of your
supply chain is your purchasing network of raw goods. Without
materials, you have no production, therefore your materials
suppliers will always be important to the success of your
business. Establishing valuable relationships with your key
suppliers is paramount to maintaining a successful workflow.
When working with suppliers we often fall into the trap of
focusing solely on price. While securing the best pricing from
your vendors is obviously important to the financial success of
your business, if pricing becomes your only priority, you may
find yourself in a situation where you get what you pay for.
Sacrificing service and quality for price will typically end up
costing you in the long run.
Let's assume you're a very shrewd, tough customer when
negotiating price with your key suppliers. This approach may
push you toward leveraging your competing suppliers against
one another. You may even change vendors regularly,
depending upon the pricing you are getting from them. Then,
one day, you find yourself in a situation where you need your
supplier to jump through some serious hoops to help you out
on a project. Perhaps it may be securing inventory on a
weekend for a rush job, or trying to locate specialty materials
in large quantities, requiring your supplier to negotiate deliveries from various destinations. Whatever the problem, you
need their help in a serious way. I can assure you that if you
have spent months, or perhaps even years, beating them up
over price, they probably won't be willing to come to your
rescue. They may just simply tell you that they can't help you
out. Again, sometimes we get what we pay for.
To be clear, I'm not saying you can't secure great pricing
from your suppliers by utilizing the marketplace. In fact, you
can, and you should get the best pricing possible from all of
your vendors. What I'm saying is that the best vendors will
always need to be competitive in the marketplace with
regards to pricing, but they may not, and most likely will not,
always be the cheapest. Excellent service and high quality will
always be worth more money. Not necessarily a lot more, but
maybe a little extra to ensure top service and quality.
OUTSOURCE SUPPLIERS
The companies providing you with products or services that
go directly to your customers with your name on the product
are your outsource suppliers. Graphics hardware, software
services, products you don't produce but are reselling to your
customers, and installation services all fall under this
category. These distributors are unique to your business in the
MARTY MCGHIE is VP finance/operations of Ferrari Color, a digitalimaging center in Salt Lake City, San Francisco, and Sacramento. He
is a partner and director of Signs.com. marty@ferraricolor.com
16
http://www.Signs.com
Table of Contents for the Digital Edition of Big Picture - May 2016
Big Picture - May 2016
Contents
Insight
Wide Angle
Upfront
Business + Management
Outside the Gamut
Can Print Shops Benefit from 3D Printing?
Beyond Water
R+D
Explorer
Big Picture - May 2016
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