Your Supply Chain Is Old

One of the easiest trails to uncover hidden profit is to reduce costs – this starts with your supply chain.

Step one: Find competing bids for your suppliers.

This process has several benefits. First, you’ll see where you’re at in the market, and how much opportunity there is to improve. You may have had it good already, but you won’t know until you shop around.

Second, it’s often best to have more horses in the stable, and it’s wise to be aware of what supplier options there are for you. And finally, you can gain some leverage for the conversations you’ll have with your existing suppliers, if you think there’s room to improve your costs.

Step two: Negotiate with current suppliers.

Then you’ll want to approach your current and most expensive third-party suppliers.

Honesty is the best policy in this process; let them know that you’ve shopped around, but that you’ve appreciated working with them (if that is the case). Make sure they know that you want to continue this partnership for a long time, and simply ask if there is anything they can do with the price.

Step three: Take a look at your lease.

If you have an office or building lease and it is up in the next six to twelve months, it’s time to shop around now.

Typically, it’s better for everybody if you can stay in your location unless you’ve outgrown it, but you need to know how the market stands.

You also need plenty of time for negotiation. Finding middle ground on a lease renewal can be a slow process, and time is on your landlord’s side, not yours. Make sure you know well in advance what the going rate is for your type of space.

It almost never hurts to explore what other options may be available. Depending on your industry, there may be new options or innovations since you last checked.

A little work goes a long way on this trail.

This is from Trail 2 of Profit Hiker: 11 Trails to gain lasting elevation in your business. Find the book right here and the program over there.