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In the current issue of the local restaurant and cooking magazine, the featured article is about the important relationships some of our city’s best chefs have with local farmers and growers. In the half-dozen relationships profiled, rarely does the topic touch on price (and when price is mentioned, it focuses on the great value). The emphasis is on other features: freshness, taste, quality, variety, shared attitudes.
These chefs also know their customers. The chefs understand that people come to their restaurant because they want a great dining experience, not because they want to save a dollar or two on a meal. The chefs know the importance of having great local suppliers in order to deliver that great dining experience.
Any business that uses suppliers can take a lesson from this. Too often business focus heavily on unit price from their suppliers, and they forget to focus on total cost, relationships, and even more importantly, how choosing suppliers impacts their customers.
Are you really saving money if you select a supplier based on unit cost, but shipments are late, parts are defective, or they require constant hand-holding to understand specifications or other criteria? The union shop across town may not be able to compete with a third-world supplier on a unit price basis, but it you account for the total cost (i.e. of testing and dealing with defective materials, extra inventory or production delays because shipments are traveling halfway around the world, the personal relationship and convenience of dealing with a local supplier), you may be saving money in the long run if the local supplier consistently delivers quality parts on time with little or no oversight.
Plus, if supplier problems causes you to lose a customer, how much have you really saved?