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How to Leverage a Supplier Relationship for Cost Savings

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Market analysts marvel at the Renaissance happening in B2B online retail right now. Forrester researchers project that by 2020, more than half (55%) of all work-related purchasing will happen online. Alternatively, for IT department spending, improving sourcing and procurement is a top cost optimization initiative says Gartner. To execute, companies implement supplier management practices hoping to monitor value on the supply side. Therefore, companies are likely to pick up the phone to do business.

How do we justify both narratives? Which is more important, self-service or relationship building?

Industry wide, 98% of organizational IT purchases start with online research, but more than half close with a phone call to an account executive. This is evidence that IT buyers understand the value in chatting with a sales professional. In short, both are important and it’s not a one-or-the-other proposition.

You can submit a Quote Request online to Account Executives when logged on to your NeweggBusiness account.

 

Research online, purchase with the help of an account executive

Supplier management procedures focus on building relationships so suppliers may better serve the company. Due diligence for a supplier means conducting business in manner that aligns with customers’ buying processes, while addressing near- and long-term goals within budget limitations. When there is a mutual understanding of each, both buyer and supplier benefit from the relationship.

Value pyramid of supply management

 

A well-organized online catalog is convenient for securing items for fixing emergency situation. Websites also aid in the research phase of the buying cycle for long term planned purchases.

When it’s time to finalize a purchase, ordering with an account professional grants additional guidance and expertise to the buyer. A good supplier always listens for opportunities to deliver value, either now or in future transactions.

Solutions grow more nuanced as the relationship matures

Procurement efficiencies and improvements to the business process reveal themselves in tangible metrics—faster turnaround, smarter spend allocation, and well-informed suppliers positioned to deliver better pricing.

Using internal data we can quantify cost savings among customers who order through account executives. Customers who order with the help of an account executive routinely save between 5-10 percent on their overall purchasing.

Consider value as responsive and accessible service that saves time

  • Ordering process tailored to customer internal systems of approval
  • Faster response to requests for quotation of pricing and quantity product selection phase
  • Price monitoring and supply-side expertise

In a nutshell, an attentive supplier saves time for systems personnel, and helps procurement specialists attain spending goals.

Metrics for “hours saved” might not appear the ledger sheet. But in a commodity market like IT equipment where margins are low and pricing is competitive, understand supplier value as finding answers, solving problems, and delivering quantity beyond usual the retail channels to save you time.

Share your pain points and long term goals with your supplier

Goals, challenges, budget limitations—share them as they exist at the moment, and how they might shape up in the long term. Talking about pain points and growth projections gives suppliers input they use to deliver for you down the line.

A trusted supplier ensures that you align purchasing with growth projections over the lifecycle of the technology. Expect to leverage a supplier’s insight and product expertise. It comes free of charge.

Universal IT procurement best practices:

  • Saving money with a five-year refresh cycle that aligns with available write-offs in IRS tax code
  • Cost avoidance of prematurely outgrowing equipment before full depreciation is realized
  • Cost avoidance of downtime, data loss, and regulatory violations from running equipment beyond end-of-life

Make vendors aware of organizational purchasing processes

Transparency—that’s why companies formalize processes around spending decisions. This might mean buying through an e-procurement system, or requiring quotations from multiple vendors on purchases exceeding a certain dollar amount. A supplier that offers seamless integration of their products into your systems, on your terms, serves the transparency objective.

Make sure a supplier knows how to accommodate you. Obligate value and receive value in return.

When it comes to pricing, consider your supplier as an extra set of eyes for your procurement goals. Let your account executive know about technology preferences like a list of preferred servers, desktops, mobile devices, and network equipment.

Given lead time, suppliers may leverage their buying power to obtain pricing on the wholesale market when demand is known.

Expect to offload some of the administrative work

A good supplier has enough product expertise to prepare a quote after a short conversation with a customer. Account executives are happy to compete for your business and will deliver the quote you need.

  • Time is money—lots of money. Especially for high level IT pros. It’s safe to say the best use of IT staff hours isn’t self-serving online orders on an e-commerce site.
  • RMAs happen—inevitably you will need return merchandise authorization (RMA) if you purchase electronics on a regular basis. A value-focused supplier makes this convenient as possible. Many times suppliers can get a replacement shipped on good faith before the defective item comes back to them—a simple value add you should ask about.

Expect sourcing beyond native logistical networks 

When you need to purchase in bulk for a large scale expansion or refresh, needing to secure quantity from several suppliers creates a logistical hassle for you. A business-focused supplier is better prepared to take this on.

In the event that IT equipment isn’t stocked with the quantity needed, a vendor adds value by sourcing equipment you need from elsewhere.

Establishing a supplier partnership circumvents quantity limitations by granting customers access to wholesale networks to fulfill the order. That eliminates the hassle of patching together orders and tracking logistics. Equipment arrives on your loading dock as soon as possible without the headache.

Expect suppliers to respect your time

Useless cold calls stem from a lack of knowledge and direction. Suppliers don’t like bothering you with a long shot. Building a meaningful relationship with your supplier eliminates random product offers when they understand the needs of the buyer.

Conversely, expect attention even if you’re a small business. A company under 50 seats is often neglected by the business sector supply line. Sure, they will take SMB business from self-service, but ultimately will short-change small companies in the guidance department. Expect better—smart suppliers understand that serving small business leads to revenue goals.

Final thoughts

Account executives know you’re busy. A worthwhile supplier will make every call worth taking. When they know the products that you order, when you plan to refresh, and what your budget constraints are, they can deliver value at every touch point. So-called thought leaders in the industry call this “IT orchestration.” We call it old-fashioned good service.

Adam Lovinus

Adam Lovinus

A tech writer and Raspberry Pi enthusiast from Orange County, California.

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