Money is not the object in this recession

You'd think in a challenging economy, everything has to be done cheaply. Certainly, the idea of over-charging is wrong in this or any economy. But think of this:

Most large corporations have slashed budgets, payrolls, closed factories and killed new products. Now those companies have to grow their businesses back. They are willing to spend money to do that--and they have a fair amount of money to do it with.

Suppliers can't think small today because the expectations and the pressures to help that large corporation are so big.

It's not about cutting corners, it's about moving mountains. That takes money.

Barry LaBov
LaBov & Beyond
LaBov & Beyond
www.labov.com
LaBov Sales Channel
PB&J Newsletter

Playing hardball in 2009

Sure it's tough out there. Companies are discounting, almost giving stuff away.

Some clients are playing hardball with suppliers--demanding discounts, concessions and throwing away whatever loyalty they had by bidding out everything.

Sounds good for clients. But...

If you're a client and your budget is reduced 40% this year...and your staff is reduced...playing hardball with your suppliers may not be the wisest decision.

That supplier, due to budget cuts and the economy, may make little to no profit on your business this year. They may have more knowledge about your product/service than some who remain on your staff, plus they bring additional insights from other businesses they deal with. You can benefit from that knowledge. It might be better in the long run to work with them and see them as a partner rather than as an expense or easily exchanged commodity.

If you eliminate them, it may be far more painful to you (the client) than the supplier.

Suppliers, Part Three: How to Best Leverage Them

This is my third post on suppliers. As a supplier as well as the leader of a corporation that spends millions of dollars annually with our suppliers, I feel strongly about the value of a good, honest supplier to its client.

Too often, corporations are one-dimensional with suppliers: bid them out, get the lowest priced one and move on.

This is the approach that GM perfected and it cost them. Corners were cut, creativity and passion disappeared (GM didn't want to pay for passion, creativity or loyalty). It's not fair to single out GM, there are good people there and there is hope that they will recover. But they won't without a different approach toward suppliers.

I've thought it would be interesting if we applied the Golden Rule to this. If you were treated by your boss the way many corporations treat suppliers, how would you feel and perform? If your boss said, "We're going to interview a few people that want your job and to be fair we'll also include you in the competition," would you be worried or would you say, "Great idea"? I think most of us would be at least concerned--after all the competitors may make performance promises that sound good but aren't realistic, they may say whatever it takes to win whether they can pull it off or not, etc.

Then factor in all the waste in doing the competition--hours upon hours of preparation, hours of going through the process for everyone and the emotional drain.

To be clear, all suppliers are not equal. The mediocre supplier that does only what is told should be bid out. The bad supplier should be fired. But if you have a dedicated, valuable supplier that goes beyond, why not first work with them to do what my previous blogs have recommended and utilize their insights and build a better, even more valuable relationship?

I say, why not give it a try? If it doesn't work, you can always bid them out next year.

Suppliers, Part Two: Get even more out of suppliers...

I've written about the value of getting insights from your suppliers. Your supplier will know much about how your company is running, where you're wasting money, how you are to work for.

But beyond your specific working relationship, the supplier can help a corporation dramatically.

A good supplier can, when its ethically possible:

1) Give you business leads. The suppler will know what's happening in the industry, they know what opportunities are out there.
2) Give you insights on your competition and share what is going on with them
3) Share what they're doing with other companies that might benefit yours (they may also get business out of this, good for them)

Ask your good suppliers to play a bigger role in your success. Why not?

Suppliers, Part One: An untapped source for economic health...

Corporations are looking for ways to save money, reduce budget and keep their doors open. Where do they usually turn?

Let's think--they downsize. They reduce offerings. They bid out their suppliers to find a better deal.

One place they seldom turn is to the people that know them best--their suppliers--not for money reductions, but for their insights.

Most of us are suppliers, think of how you could help your clients if they were open to your insights? Most suppliers--loyal, good ones--want their client to do well, be healthy and stable.

Sounds obvious, but it's not in our business world. Most corporations don't want to be vulnerable or beholden to a supplier. They're more comfortable hiring the supplier to do work.

The smart client should look at the supplier as a source of great insights (and of course good work at a fair price).