By Dawn Prebula*
Maximize Your Purchase Power
“How'd you like to use your purchasing power to partner with your suppliers to make a win-win business situation for all?”
Considering that the average annual “spend” of a municipal golf facility is +/- $4 Million (golf and country clubs are a little more), if you could save just 1.5% you would realize savings of $60,000 or more!
It definitely pays to leverage your buying power through alliances with suppliers. But, who should you partner with? How do you structure the deal? How can the supplier help your business? How do you manage the supplier relationship? Should you join a buying alliance or purchasing consortium? This article will help you to answer those questions.
Select the Right Supplier
It is important to qualify your prospective suppliers by thoroughly researching their credentials and background. Make and use a checklist to evaluate the qualities of all potential suppliers:
- How long have they been in business and what is the background of the company?
- Verify their reputation and affiliations.
- How do they align themselves with the golf industry and support the associations?
- Do they have the appropriate certifications, licenses, inspection procedures, safety programs, etc. that will meet your needs and protect your facility?
- Inspect their place of business, if possible. Visit the distribution centers and meet the staff that work there. Most reputable suppliers will welcome customer visits.
Negotiate a Win-Win Contract
“Win - Win negotiations” are best for all! In days past it was quite common to see the customer “beat up” on the supplier. However, a collaborative process of buying and selling has been shown to be far more productive for both parties, especially in the long run. And, the ideal is a long-term, mutually beneficial relationship.
What is important to the customer and what is important to the supplier can vary from one negotiation to the next. Suppliers in particular, need to be very attentive to learn what the customer really wants.
Consider the total cost of ownership
when making a buying decision. Price is a factor but not the only consideration. What other qualities might be involved in the customer’s decision process?
|| What is the life of the product? Is there an adequate warranty associated with the products?
|| What are the packaging, delivery and unloading terms? What training will the supplier provide? It behooves both parties to be sure that the employees are well trained in the use of equipment or supplies sold to the facility.
| Payment Terms
|| Are there volume discounts or early payment incentives available?
Seek Supplier Add-ons
Many suppliers have ready-to-go, point-of-sale materials that you can use in your merchandising efforts. Others are willing to help you customize your offerings. Several examples include:
Menu Board shown to the right of Frito Lay.
Outfit the convenience cart with a magnetic logos and a menu board that includes pricing. These have been shown to result in greater revenue dollars per round of golf and also to help speed of play.
Your food and beverage suppliers can provide chip racks for the convenience cart or a beverage rack in front of the cart to display drinks or other merchandise.
Place mats that illustrate prices of beverages, food, snacks and proshop items or combo offers for counters in the snack bars can speed up the ordering process.
Cart signs can be used to promote specials.
Other ideas include:
- Beverage purveyors can often provide coolers, etc. to be placed in the snack bars or proshops.
- Ice cream companies will often provide freezers for “grab and go” product sales.
- Signs, clocks and other décor are budgeted items for most suppliers.
Check for Other Supplier-Provided Benefits
Ask your suppliers if there are additional supplier provided benefits such as:
- Marketing materials – Generic or customized POS (menu boards, table tents, signage, napkins, coasters, etc.).
- Help with menu or other printing needs – For discrete menu mention (Example: Coffee by Starbucks), suppliers will often offset the cost of menu printing.
- Research and development – new menu ideas and development.
- Contest and incentive prizes for members/guests events, co-worker contests or charitable outings are often available from suppliers.
- Vendors will often pay to attend a bridal show at your club that might result in many additional dollars in revenue.
- Many suppliers will support demo days with product provided for gifts to customers, etc.
- Don’t forget to ask your supplier for their golf and club related business such as outings, charity tournaments, entertaining and company sponsored events and celebrations.
Build Strong Supplier Relationships
Win-win relationships must be nurtured to keep the relationship successful.
It’s important to share your goals with your suppliers so that they know how to best support you. Mutual respect is critical. It is important to treat sales people, customer service personnel, receptionists, delivery personnel, etc. with respect.
Understand your agreements with your suppliers.
Know what deals you have or don’t have. You need to take total responsibility for your agreements with suppliers and be sure that the details are followed. What are the expiration dates, renewal terms, payment options, etc.?
Some suggestions on how to manage and improve supplier relationships to achieve a “win-win” include:
- Include suppliers in member and guest events, if possible. Consider offering the supplier opportunities to participate with hole prizes, demos, etc.
- Invite top suppliers to facility employee events such as Christmas parties, etc. Consider them part of the facility family.
- Recognize suppliers for their contributions to your operations; it’s a team effort.
- Keep in mind that suppliers are in business to be profitable. This is common ground that needs to be understood by the customer.
- Provide open and honest feedback to your suppliers regularly. The 80/20 rule usually applies to your purchasing practices. 80% of your purchases are from 20% of your suppliers. It is self-serving for you to help your top suppliers to get better. Catch them doing something right and tell them! You need to build that emotional bank with suppliers before you draw against it. A call to thank them when it really goes well can pay back in spades later!
- Be sure to document your improvement discussions. It will be easier to exit from a contract if that becomes necessary down the road.
- Establish a supplier rating system such as a point rating system 1 to 5 on the five critical issues: quality, delivery, price, leadtime and customer support. Meet with the supplier to rate past performance and expected future performance. Do this at least once each quarter, and hold the review at the supplier’s location at least once a year if possible.
- Understand compliance issues; yours AND theirs.
- Offer incentives to your suppliers.
- When ordering, plan ahead – don’t make unreasonable demands.
Consider Buying Alliances and Purchasing Consortiums
Who are the different organizations offering purchasing alliances or consortiums?
You need to do your homework and investigate each opportunity to see which might best fit your needs.
How should you go about making comparisons amongst the available purchasing partnership options? What would be the best fit with your operations? How do you take advantage of the economies of scale?
Here are some general rules to follow:
- Understand the companies and product categories represented by each of the alliance or consortium options. What best meets your needs?
- How easy is it to utilize the purchasing process within each of the alliances or consortiums? You will have to be able to easily link up to the appropriate programs to successfully take advantage of the offerings.
- How does each of the alliances or consortiums make their money? This is important to understand. Often, these groups indicate that they are a free service but – buyer beware – there is no free service out there. How do they pay for their overhead? You need to understand.
- What are the restrictions and compliance requirements of each of the options? Be sure to understand what you are signing on for.
- What are the rebates, allowances and terms offered by the alliances or consortiums? Every supplier agreement is different. Which will work best for you?
- Dues? Some charge and some don’t. Understand these costs.
- Compare customer service offered by the options. What services are important to you that should be provided by your purchasing partner? Some considerations are:
- Timely response to your service inquiries
- Staff education
- Invoice analysis
- Updates on new programs
- Capital purchase quotations
- Access to industry experts
- Providing savings ideas
- Accredited continuing professional education
- Guaranteed savings.
Membership can have its benefits. By aligning yourself with the correct purchasing partner for your facility, you can save money while improving quality and service. Do your homework, select carefully and reevaluate your situation regularly.
Originally posted by DawnPrebula
on 13 Aug 2008.
All contributors: DawnPrebula
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