Big Fish, Small Pond
Why You Shouldn’t Carry Too Many Vendors
One common mistake I think framers make is carrying too many vendors. Take mouldings for example. If you have more than four vendors supplying your assortment, you are probably losing money. Why? Because you are paying higher shipping costs to support many smaller orders instead of larger, more consolidated orders.
In addition, you are probably losing discounts by spreading around your purchases. Consolidating purchases lets you become a more important customer to a vendor. More important customers are able to negotiate better deals. One other way too many vendors cost you money is in labor. If you added up all the time spent on creating and receiving orders over a one year period for each vendor it would be many hours.
Replicating sources for matting can also tie up valuable dollars in inventory. If you carry three lines of basic mats, you will soon be duplicating colors. This means you could own the same color purple mat from three different sources. If the average shop carrying one basic vendor has about 1000 scrap mats on hand, a shop with three basic mat vendors will have well over 2000. The result is a lot of money tied up in materials that are not producing income.
If you have more than 4 sources of moulding and more than one basic source for mats, your opportunity for finding an instant cash infusion is right in front of you for 2011. Make the tough decision to reduce vendors you’ll become a bigger fish in our small pond.