SHOULD I KEEP BUYING FROM ONE SOURCE?
... Frank
by Alan J. Zell, Ambassador of Selling

Q. I have been asked to take over the buying duties in our firm. About the closest I've ever come to buying anything is when my wife sends me out to bring home bread and cookies. While my question may sound stupid, this question has kept we awake all weekend. What I am puzzled about is: "Do I keep buying things from just one firm or should I be looking around for other suppliers?"

Frank (from Belgium)

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A. Frank: You pose two very interesting questions. The answer to the first one is both "yes" and "no." The criteria for making such a decision rest, first, on whether what is being bought is proprietary to that supplier.

For example, in my "former life" as a retailer of fine crystal, one of the lines I bought was Val St. Lambert, a very prestigious supplier from your country. I had only one choice of a vendor, their US agent that is, unless I wanted to "bootleg" (go around my supplier) and buy it from someone who had purchased it, usually in another country. For whatever reason the vendor was willing to sell the line at a price that, when the line landed here in our store, was lower than what I would normally pay from my supplier. (In using this as an example I am in no way admitting that I ever did such a thing but the opportunity to do so arose many times.)

As to your second question, if what I was buying could be supplied by several sources, then there were many criteria I would consider when making a decision to keep buying or change from my current vendor. Although most think it is price that makes the difference, often it is not.

As an example, shipping cartons and gift boxes fell into this category. Quantity often determined the price; as the quantity increased, the price per box decreased. But how many does one need at anyone time so that there is sufficient supply to last between the time of a re-order and when it will be received? The other factor that was to get the best price the question would arise as to where we going to store the extra boxes/cartons until needed. Well, one supplier offered to store the surplus at the firm's warehouse, at no extra charge so, of course, we bought the quantities that made for the lower costs. Why did the supplier do this? Well, they had a sure order and even if they didn't make everything at one time, they knew that in slack times they could keep their plant busy, and they had our money as we had to pay the bill for the total order.

There were some box sizes, however, that we used much faster and the maximum order/lowest price quantity for these sizes did not need such a service. Here we would check with several vendors to see if we could order less than maximum but still get the best price by combining two or more sizes to make up the quantity. In this case, we used, over the years, several box manufacturers.

As a buyer of products and supplies, my mentors taught me to follow the 4 rules of buying:

1. Never buy for others to own/use/do what you desire to own/use/do yourself.
2. Never buy something you know nothing about from someone you know nothing about.
3. Know as much about what you don't buy as you do about what you do buy.
4. Before a decision to buy is made, it must be understood how the purchase will be sold to others in the organization as well as to how it affects or is used by the organization's customers.

At any level of a distribution system from the raw material to the final user, these rules apply. Follow these rules and you will soon be considered a professional in your field.

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