In any business, supplier costs are a big factor. But when examining true cost, you can’t simply look at the short-term financial expense; you also need to examine the longer-term economic impact on your business.
Long-term economic costs can include factors such as lower quality, decreased customer satisfaction, increased delivery time and more. While these costs are harder to estimate, savvy business owners take the time to examine these costs in detail to ensure they aren’t penny-wise and pound foolish.
Midwest Distributor Bites on Lower Costs and Gets Bitten Back
One of our clients had the unfortunate experience of being bitten by a low cost supplier. This food distributor in the Midwest was offered an amazing deal to change to a new bargain snack supplier. While the short-term decrease in overhead costs was attractive, the long-term business implications were crippling. After changing vendors, this supplier was faced with a host of issues, including:
- Lower Quality Ingredients
After promised high quality for a lower cost, the reality was an inferior product. This had a quick and dramatic impact on consumer confidence and caused widespread damage to the brand.
- Poor Packaging
First impressions count! When faced with a competitive category like snacks, image and packaging can make or break a consumers buying decision. By sacrificing packaging design and quality for a slightly lower price, this distributer also found sales at his client stores declined.
- Slow Order Processing
Without inventory, you can’t make money—especially when you’re a supplier! Unfortunately our client found this lesson out the hard way. After opting for the lower cost supplier, order processing went from a 2-3 day turnaround, to over 30 days. The result was unhappy clients; many of which began to explore other distributors that could meet their needs more quickly.
What can you do to protect your business?
- Don’t be fooled.
If it looks too good to be true, it probably is! In order to supply an amazing deal, sacrifices are made. Whether the snack provider is using lower quality ingredients, poor packaging or a skeleton service crew, the results will not be good for your business.
- Try before you buy.
Before committing to a new supplier, test out their product and service capabilities. Request samples, and don’t make a rash decision.
- Do some research.
Ask the supplier for references. Call their clients and ask probing questions. Think about any issues or challenges you have faced in the past and ask the reference if they face the same problems. Ask the reference how the supplier has dealt with issues/problems in the past.
- Choose a vendor with high quality and fair pricing.
The best piece of advice we can provide is to opt for higher quality products from a vendor that is honest and provides fair pricing. Your customers will appreciate the quality and consistency, and the long-term costs will be much lower than choosing the low-cost supplier!
At Mister Snacks, we take great pride in providing high-quality snack options at reasonable prices. We continually seek out the world’s best ingredients. We have invested in state-of-the-art packaging machinery that allows for private label lines. Our order-processing time is unrivaled in the wholesale snack industry. And, our track record is impeccable! Call us today to learn more.