Digital Dealer - June 2019 - 9

one or all of the following:
1. QUOTE CATEGORIES
OF SIGNIFICANCE -

Too many organizations
continue with the status quo
and leave suppliers in place
for years, never challenging the supplier pricing in
any organized way. Letting
suppliers know that you
plan to go out for quotes
in their category will make
them nervous, and that is a
positive thing. If incumbent
suppliers are faced with the
knowledge that the game
has changed and that they
need to compete for the
business, good things will
happen.
First, develop a list of all
expense categories and
the corresponding annual
spend for each. Start with
the largest spend categories working your way to the
least cost categories to pick
your categories. Within the
category, do some research
from invoices or usage
reports and learn what you
buy and the resulting prices
you pay. You can now build
a RFQ in Excel for that category and quote with three
to four suppliers to obtain a
competitive result.
2. GATHER PRICE
BENCHMARKS - Data is

power. Dealers know the
value of data in marketing
and sales. The data you
gather around supplies
and services puts you in
a better position when
quoting, negotiating, and
making decisions on suppliers going forward. Most
managers that have been
in the automotive space for
years have a high degree of
confidence in their negoti-

ating skills and feel that is
all they need to provide a
positive result. Suppliers
love that arrogance; they fill
the negotiator with notions
that they are receiving the
best price anywhere in the
country and the negotiator
believes it. The result is
usually a minor adjustment
to pricing but may not come
close to market pricing.
Benchmarks are powerful
and can be obtained from
other stores in your own
group. Another good idea is
to utilize your 20 groups to
provide and gather benchmarks. The best, real-time
solution is to generate a
RFQ as was noted earlier.
The RFQ pricing represents
the best data you can collect in the marketplace as it
is real-time and pertains to
your geographic footprint.
3. PHILOSOPHY
OF PRICE LOCKS -

Rather than accepting
short-term tactical pricing
from suppliers that can
increase whenever they
feel like it (price creep), use
a different approach and
request "firm, fixed pricing"
for 12, 24 or 36 months
from your supplier(s). That
strategy alone can save
significant dollars to your
organization and provide
real peace of mind to the
management team as well.
While you are requesting
price locks, require the supplier to provide the following
business terms as well:
 Pricing to include
delivery
 2% 10 days, net 30
payment terms
 Accept credit card
payment for invoices

 Price locks on all
supplies or services
for 12, 24, 36 months
 Warranty, service
levels, return policies
4. GET CREATIVE -

Personally, I don't like being
backed into a corner by a
supplier with fewer options.
When options are limited,
when results are going in
the opposite direction than
expected, I tend to get
hyper-competitive and so
should you.
As an example, if the
options coming in from
your Uniform and Laundry
suppliers are not what you
expect or what you need,
what can you do? One
approach is to blow up
the paradigm altogether.
Maybe your dealership
buys the uniforms from a
manufacturer directly and
you provide those directly
to your employees. Employees are then responsible
for regular laundering (as
they do in many industries),
eliminating the need for
lockers, weekly delivery
services, and infamous
environmental fees, etc.
Maybe you buy your own
mats rather than renting
mats and maybe you use
disposable shop towels
rather than those that now
cost $.12 rather than $.04
each that they used to cost
before consolidation. This
is a viable and cost-effective alternative to "renting
uniforms, rugs, and towels"
and I guarantee it will get
the attention of suppliers if
enough dealers adopt this
approach. Consider using
the U.S.P.O. for time-sensitive deliveries and use
D I G I TA L D E A L E R . C O M

couriers for time-sensitive
in-state deliveries. For
digital marketing, one suggestion is to either complete
or hire someone to complete a digital marketing
audit to eliminate redundant
services that you likely have
today. That action will allow
you to have some power in
your negotiations with your
suppliers and help reduce
costs.
Managing expenses in
a dealership are always
challenging given the 130
expense categories you
have to contend with.
Industry consolidations, and
acquisitions and mergers
add to the expense pressure that dealers are facing.
There are strategies you
can employ to combat those
price increases. You have a
choice, either get proactive
and take steps to combat
those supplier actions now
or face additional cost
pressures with little or no
recourse.
For a list of items to help
you negotiate with your
supplier, email daustin@
strategicsource.com.
DOUG AUSTIN is the founder
and president of StrategicSource,
Inc., the leading provider of
spend management services
(strategy, spend mapping,
sourcing, process improvement,
and audit) for the automotive
and truck dealerships, and
various other vertical markets.
Doug is a veteran of the U.S.
Marine Corps, a graduate of the
University of St. Thomas, and a
speaker at various conferences
and 20 Groups. Doug has
acquired 30+ years of line, staff,
and executive experience in
spend management and supply
chain management in various
vertical markets. Doug is also
a trainer, speaker, consultant,
and business owner. EMAIL:
daustin@strategicsource.com.

JUNE 2019

9
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Digital Dealer - June 2019

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