There seems to be a supply situation at the moment where the little guy often struggles to win bigger contracts on price alone, especially when competing with larger suppliers who can source directly and who may have decided to cut their margins to the bone just to get larger and larger contracts.
It’s not a brand new problem, but it’s one that has caused some notable casualties recently, even for the larger suppliers, who thought they could ride out the recession by effectively buying new business.
And it’s worth discussing now more than ever, because the solution is not just about the piece cost price of each garment, but the full cost of supply, including all associated administration and overhead costs, which can make up a significant, but often unrecognised part of the full contract cost .
For David to win he needs to throw his pebble and sling away and turn to use smarter technologies and computer software if he is to compete, prosper and win.
He needs to turn things on their head and to understand his own weaknesses and those of his competitors, before he can find a way to win.
Often the weakest link for the larger supplier is their over reliance on outdated systems to control their contracts, these often needing larger numbers of staff, and hence cost to maintain effective service levels. As contracts become more complex and information demands from larger customer increase, so to do their costs, but since the contract price is fixed there is no way to pride this without eroding margins.
It is of course a very obvious weakness for the smaller supplier that they do not have the same buying power as the larger companies. Nor can they afford to buy stock in the huge quantities required. This means that their pricing is often not as keen as their big customers would like – or as competitive as their bigger rivals.
So even if the issue of piece part cost does not scupper a small supplier’s chances of securing a deal to supply a major company, the amount of information they have to provide could do. A small supplier running a basic spreadsheet system will struggle to give a customer a full, contemporary rundown of current and potential capacity either before a contract is signed or as it is progressing.
David’s new weapon of choice needs to be, low cost powerful, fully integrated stock sales and supply control software with Internet based customer ordering and reporting. Such systems, which until very recently were only within the financial remit of larger companies are now very much more affordable at the Small to medium company level.
Such systems enable David to manage and maintain larger contracts with the minimum of administration and back office resources, so this very real cost saving is now available to boost the margin price difference. Not only that, but his customer gets a better service with online ordering and instant reports.
At AppGMS, we provide a fully-integrated web ordering module that is linked to a back office stock management system. It allows for stock information - including garment specification and images – to be uploaded automatically to the website and can download orders for processing through to invoice. Such software means the small guy may not have the spending power of the bigger guys but they can now operate a lot more efficiently, cut down their admin costs and reduce their price per garment.
Software allows for more innovative pricing, better control of stock supply and gives suppliers the chance to tailor the service they provide to individual clients. Processing and managing details of orders no longer has to take up valuable administration time – the software is there to make these things happen quickly and efficiently.
For complex added value multiple employee and depot uniform contracts, deliveries can be consolidated onto monthly invoices, meaning quicker billing and, therefore, quicker payments. Such a process can remove the cash flow problems that can also bedevil small to medium suppliers who may be fighting a losing battle to get paid quicker simply because they are relying on an old-fashioned manual system.
Good software for a small to medium supplier earns its keep by saving money. It does this by letting the system take the workload off their own staff and their customers. The small to medium supplier can also save the customer the expense of having their own online ordering site and all the associated administration time that this can require for matters such as returns, invoicing and distribution. The supplier can now give the customer their own branded web-ordering portal that is designed to complement their own online presence.
As a general rule, the bigger a customer company becomes then the more scope there is for inefficiency. So if the little guy has the software to ensure he can guarantee his customers more efficiency then it is a win-win situation for both parties.
The bigger customer feels like he is getting better service as well as guaranteed efficiency while the little guy gets the contract, which he can easily meet because he has the software to improve his service levels and monitor his resources more effectively.
We know this goes on because our small to medium customers tell us that this is how ApparelGMS helps them gain new business. Their newly won larger customers can be as hands on as they like without the hassle that goes with it. Everyone is less tangled up in admin and yet fully able to access their orders at any time.
David wins by being able to manage stock levels more intelligently, reduce order turnaround times, improve delivery and invoicing, by providing better more efficient customer service levels…
Having slain his Goliaths he can go on to win more big customers and grow his business.