The Hidden Costs Associated with the Change of Suppliers

Bogdan Büchner

Choosing to take advantage of indirect goods can be a great way to save your organization some money since many suppliers are always willing to offer some great deals in order to acquire your business. Since many of these businesses will even allow you to keep purchasing the same brands you’re used to, it can be very tempting to make this type of transition. However, it’s important to be aware of the impact that this can have on your company when you change suppliers.

While lower prices can be great and being able to keep all of the products you love is certainly a wonderful bonus, know that when you change suppliers, your decision will not be without its difficulties. Opting for indirect goods will almost always impact several of your organization’s buyers, meaning that it can sometimes be difficult to get the go-ahead from all of those who might be impacted by the decision.

Before you choose to change suppliers, you’ll want to consider the following:

  1. Understand that many of your colleagues may not be able to acquire the products they are used to, which means you should have a plan to replace those needs before you change suppliers.

  2. Change is often difficult to accept, and you need to know that not all of the users will be happy when you change suppliers; make sure to keep all individuals in the loop so that they are kept abreast of any and all changes.

  3. Adopting a new system will undoubtedly come with some glitches, especially in the beginning; you’ll want to ensure that you have enough inventory prior to the change in case there are any hiccups along the way.

  4. If possible, avoid making any changes during your business’ peak times.

  5. Stay on top of your inventory and any changes that are made in your products.

Along with the obvious logistical issues you should be aware of when you change supplier, you’ll also want to make sure that you are cognizant of any fees associated with switching. Making a change in your supplier can have a number of costs associated with:

  1. contract negotiations

  2. switching of the systems

  3. terminating your current contract

If you’ve been with your current supplier for some time, odds are they are very familiar with your needs and the type of business you’re running. If you have experienced minimal issues during the course of your partnership, you may want to reconsider making a change, especially if the financial savings will be minimal. In cases like these, trying to renegotiate your current contract may be a way to both save money as well as maintain the status quo.

However, if you’re experiencing significant issues with your supplier, don’t let the idea of change stand between you and a better situation. Keeping things the way they are could end up costing you. Just make sure to have a strong, concrete plan in mind before making the transition so you can make the process as seamless and stress-free as possible.

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