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Sign Company Shops Its Supplier’s Pricing

Results of renewed efforts explored in “The Case of the Vendor Bender.”

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“WHY?” WONDERED TYLER Armstrong, owner of Satellite Sign Co. in Houston, as he reviewed the past few invoices from his principal supplier Space City Sign Supply. He found the pricing of many items had gone up by 15-30%, all without his being made aware of any changes.

Tyler met with Yamina Blanca, his purchasing agent, only to be told that Satellite Sign had bought the same products from Space City for a long time and just naturally went in that direction at this point. “This is the kind of complacency that can kill us by a thousand cuts,” Tyler said to her.

ABOUT REAL DEAL

Real Deal scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved and should not be confused with real people or places. Responses are peer-sourced opinions and are NOT a substitute for professional legal advice. Please contact your attorney if you any questions about an employee or customer situation in your own business.

ABOUT THE AUTHOR

Created by ROLF L’MAO, Signs of the Times’ mascot. Email him at editor@signsofthetimes.com.

Illustrations by Karina Marga Cuizon

By the next morning Tyler had looked further and found the increases dating back for close to two quarters, and not only with this one vendor. He knew by the throbbing in his temples that his blood was up. Tyler requested that his team isolate the top items and products that Satellite Sign orders and send RFQs out to all of their standard suppliers, even a number of new ones.

As the price requests started to come back, Yamina and Tyler were utterly amazed. Not only had they been paying on average 20-25% more for the exact same material from Space City and their “standard” vendors, but also Satellite Sign’s so-called “special-order items” were kept in stock by another vendor that could literally get Satellite Sign the same product by the next day. Another previously untried vendor even offered double the warranty within some of their lighting components just to get their foot in the door to do business with Satellite Sign.

Six months later, Satellite Sign Co. still purchased three-quarters of the products they had been buying from Space City Sign Supply before, just at a better price with a better warranty, plus a couple of extra eyes on the account to ensure that Satellite Sign was in good hands. The owner of Space City met with Tyler, took him to lunch and pleaded a very good case for how important the partnership was for Space City and how much they wanted to show Tyler they wanted to keep his business.

Meanwhile, Satellite Sign had developed a small handful of new supply companies for other materials. These new vendors were eager for business and to initiate a relationship.

“You know, I sure have seen a complete turnaround with how readily available our supplies have been in the second half of this year,” Yamina said at a year-end close-out meeting. “It has really made my job a breeze!”

The shop was building signs more quickly, while the crews were getting many repair calls done in a single trip as they usually had the stock they needed.

“Heck, we even had Joe from Space City run some stock to a job site last week on a Saturday so we could get the job done,” Yamina went on. “He brought the crew lunch and the installers just really appreciated him.” That install crew had been wearing the ballcaps that Joe left with them ever since.

“One thing that I learned from this is that we can get complacent at times,” Yamina said. “But complacency has no place in purchasing or the supply chain. You got complacent with me, I got complacent with them, they got complacent with us and Satellite Sign suffered in the process!”

“You know,” Tyler replied, “competition has an ornate way of keeping us all honest and that works both ways.”

My thanks to Matt Baker, Bakers’ Signs & Manufacturing (Conroe, TX), for this idea. — Rolf L’mao

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The Big Questions

  • Has your sign company ever shopped vendor pricing around? What are your thoughts on doing this to seek out the best deal?
Marilyn T.
Union City, NJ

I always shop my purchases with 2-3 suppliers. I’m honest and my suppliers know that I look for the best pricing each and every day.

The problem that I have is seeing so many price increases, regularly. It’s hard to keep up.

Jenna A.
Minneapolis

In my previous role prior to Serigraphics, I was responsible for building vendor relationships. I established a form to document various details to find the right fit. Using the same specifications for the signs we needed, I would document response time from initial inquiry, prices, misc. updates/questions from the potential vendor, shipping information, such as tracking numbers, as well as a few other details. Once we received the product, we reviewed the quality of the items as well as the form created. We were able to establish quality vendor relationships based on that process.

Cindy G.
Placerville, CA

Wow! This situation really made me think about my present suppliers. “Complacent” seems to be a word that covers a lot of words… comfortable, trusting, lazy… and seems to open up the door for some other words… unethical, uncaring, greedy. Is that really capitalism? I don’t believe it is. That is not what I have learned as the American business way of life. I forget not everybody lives like that. It would be nice to have suppliers let us know if [the price of] a “staple” of what we order goes up so I can pass it along or shop the price and still make a living. I guess it’s my bad for not checking other sources before a bid. Every time. Also, relationships in business seem to not mean as much anymore. I let my clients know when things have to increase because I want to continue that working relationship. I will be more on guard than complacent in certain business dealings from now on.

Patrick D.
Addison, IL

Keeping your PA on a short leash [has been] critical since Covid destroyed the supply chain. It still has not been restored. It’s normal to assume your regular vendors are giving you the best prices, but they don’t have the same risk. Their business is buying and selling with a guaranteed profit margin on everything they do. The few mistakes they make are tiny compared to what can happen at a sign company. It’s incredible how a well priced job can go south by complacency or judgement errors. A lazy PA won’t make that last call to one more supplier to see if they can squeeze a little more margin for the company. Steel costs are all over the place since Covid. You can save thousands of dollars just by making one more call before you buy. Asking, “Is this the best price you can give me?” before every purchase will have an impact. Your PA should be comfortable doing this as a routine.

Dan W.
Tucson, AZ

I sure have! The benefits are obvious.”

Stephen S.
Indian Trail, NC

For us, pricing is not the only reason to partner with a specific sign supply company. We factor in service, quality and accessibility along with pricing. Each quarter we usually find new vendors, whether online or other ways, to compare pricing to the vendors we currently use. If our current vendors’ pricing is slightly higher but they take care of us we tend to become complacent with them. The more you order from one company, the more value you have with them. Our current vendor reached out to us knowing we shop around and offered us a discounted pricing sheet. Within the last few years prices have fluctuated rapidly due to inflation so we try to stay on top of our cost before quoting each product. If we can make a few extra dollars on projects and pass along a better price to our customers then it becomes beneficial for us to shop around (without compromising on quality).

Charles J.
Live Oak, TX

We compare pricing every so often; however, we ask for price-matching and usually use who services us most. Those who call on us and educate us on new products and such get our business. So, price is not always the answer. Service is where it is at. There is a lot of room for improvement from bigger companies.

Kevin O.
Dallas

Years ago, a chef friend of mine told me that no matter where she would get her produce or protein, she would reject a few from every batch, ensuring the vendor was always on their toes and never tried to pass off subpar products. I always thought that was great advice.

Robert D.
Oakdale, CT

We did exactly this for years when we did a lot of fabricating: sent out a spread sheet to the supply houses in our area and got back prices. Now since we don’t fab anywhere as much, we stick with the one vendor that stuck with us through some very hard financial times. Sometimes it means paying a little more, but the loyalty factor goes a long way in our company.

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