It seems like, wherever we turn, we are all wearing more hats while being expected to produce more, faster, with less money and resources. Whether a sign of the economic times or an evolving marketplace “Less” is the new “More.”
As the result of being acquired recently, a long-time customer of ours came calling this week to update us and bring us an intriguing proposition. Now that he has been integrated into the larger structure of his changing company, he has a new role in which he exclusively oversees all PCB design services, fabrication and assembly. Like everyone else, he is being asked to do more with less. He must buy more product, ensure quality, while saving money through cost cutting initiatives.
Inspired by a rental car company, he came to us with an intriguing and unique proposition. After evaluating the broad landscape of their existing 33 suppliers, being used across multiple locations, he identified his top 10 suppliers by performance, quality and value. Then, he created a proposed rebate program in which suppliers will offer rebates based on the total dollars awarded each quarter. It looks something like this:
1-10K = A%
The larger the amount awarded, the deeper the rebate. We were a bit leery at first—wanting to jealously guard our precious margins. As we covered the entirety of his proposal, however, we saw this created many positive effects for both companies.
- By reducing the supplier base, we will now get a much larger piece of a smaller pie—increasing our sales handsomely.
- This committed our customer to key partnerships that yield time-proven results while creating motivation from their suppliers to perform by awarding larger orders and contracts.
- This ensures much desired commitment and loyalty from our customer, allowing us to make confident sales forecasts for which we will willingly reward them with rebates.
- This greatly reduces the number of moving parts for our customer by reducing the supplier base, which increases yields by using the top performing suppliers. It also cuts costs in a dramatic and measurable way.
Now, we all know there are situations in which this wouldn’t be feasible. In this case it worked beautifully and everyone wins on varying fronts. Let’s face it, in these times in which we must forever be squeezing more out of less, creativity and innovative ideas like these are a breath of fresh air.
I hope this short blog will inspire you to find fresh ways to get the job done well, within budget,and allow you to slip off a hat or two along the way.
Let me know if you have put any creative initiatives in place like this one, I always enjoy learning from you! Thanks to our customer for his creativity and allowing us to share this story.