Everyone is feeling the pinch of the economy, which makes it a great time to reevaluate your vendor/customer relations and together determine if there are any ways to creatively reduce the price you are paying for corrugated and other packaging products.
Trouble “Trickles Down” Too
As we all look for ways to reduce costs, it is easy to become focused solely on our own individual needs but we are all in this together whether we like it or not. A good “win/win” scenario is not taking advantage of the other person twice, and good vendor relationships and alliances can and should work to the benefit of both parties.
Creative Cost Reductions
We all tend to get comfortable with the status quo and are busy enough to not have time to fix something that does not require fixing. Current economic circumstances suggest that we revisit some of those long existing relationships and buying habits to determine if there are changes that can be mutually beneficial to customer and vendor alike. It may help to begin the process by examining three critical areas:
Order Quantity – there are many situations on many products including corrugated where a lower price is available if you are able to buy in a slightly larger quantity. Material prices tend to rise and fall but set up costs typically and consistently escalate. Amortizing these set up costs over a larger quantity and minimizing their impact is a great way for sellers and buyers to both gain and potentially reduce costs.
Freight – much like order quantity, freight is a cost that rarely drops in price. Even though gas and diesel prices have stabilized somewhat, shipping costs have a disproportionate impact on relatively low cost, commodity product like corrugated packaging. A term we have all heard in the past – “just in time delivery” – sounds great but we all know someone is paying the cost of those weekly deliveries. A good vendor/customer relationship acknowledges that cost and looks for ways to help reduce them.
Terms – at a time when cash is king, many suppliers are willing if not eager to offer terms for prompt or early payment. It helps them manage cash flow and on some large spend packaging products like boxes, the savings for you can really add up. It may be time to revisit and renegotiate terms because times have changed dramatically.
This Too Shall Pass
We all buy and we all sell something to someone. An economic climate like we are currently experiencing sometimes feels like it is going to go on forever but it won’t Customer and vendor relationships will either grow stronger and healthier or be casualties of the difficult times and our approach can help determine which it will be.