ers find these companies to be a useful source for both price comparison and fulfillment, but usually for a more limited range of products. Even classic mail order catalog suppliers have migrated to online catalogs, although some continue to print targeted expensive catalog books that are oſten obsolete before the ink is dry. The typical online supplier’s business model requires sourcing their inventory from either a manufacturer or, more likely, a distributor and trying to leverage their buy- ing power, as they work the spread between their cost and selling price. This means yet another step in the distribu- tion chain, since these online companies often represent one incremental layer of cost and profit margin. Be sure to pay close attention to return policies in this arena, or risk incurring hefty restocking fees. Understanding “Price” and “Pricing” We are all intimately familiar with the term “price,” although this can take several forms: sticker price, manufacturers’ list price (MLP), gross price, net price, volume price, case lot price, etc. The oſten less-familiar term “pricing” is usually associated with a seller’s marketing strategy, whereas price is one of sev- eral closely related elements in what’s called the marketing mix. However, from our purchasing perspective, we should think of pricing as encompassing the previously discussed price but also other related factors, such as freight cost, minimum orders, transit time, ordering efficiency, credit terms, return policy and other added-value elements and terms of sale that can profoundly impact our total acquisition cost… and oper- ating flexibility. Evaluating Suppliers and Their Performance Did you know that some of the more sophisticated players issue what is essentially a report card for their fulfillment sources? If you have never experienced this, you (if a fulfillment source) are assigned required performance standards and then graded against how well your actual performance met those same stan- dards. Examples of such elements include percentage of orders: shipped on time, shipped complete, received without missing or damaged parts, returns percent and similar considerations. Typical accounting soſtware will provide relevant reports, such as a purchase journal and a listing of your suppliers, and you can generate this in descending volume order. Why not develop and implement a simple system for keeping track of how well your most important suppliers perform for you? How WWW.ALOA.ORG oſten (percentage of orders) did they have what I needed? Ship on time, complete or accurately? So, next time your primary suppliers visit or announce a price increase or complain about your low spend volume, show them their report card from your company. Better yet, use these evaluations to more objectively select/retain your suppliers! What’s My Best Source? Should I buy from a factory, a distributor or an online source? The answer is — wait for it — yes. It’s a bit like those disposable adult diapers seen on TV commercials: It depends! At the end of the day, if your preferred supplier(s) does not have what you need or is not able to get it to you when you need it, then what difference do location, discount, credit or other considerations make? This is probably as good a time as any to confront the prover- bial elephant in the room. In addition to the obvious reasons, the truth is that many purchasers make at least some of their sourcing decisions based largely upon credit considerations. When they exhaust their credit limits at one or more of their preferred sources, they place orders where they have access to additional credit! But I am sure that you would never do this! The Ultimate Weatherproof Padlock • Weatherproof • 250,000+ Key Codes • 5-Second Shackle Change • No Keyway 1-800-567-0451 capitolindustries.com OCTOBER 2019 KEYNOTES 15 DEFIANT P ADLOCK
