The sourcing department of every corporate struggles with the foolproof buying of merchandise or promotional items! The challenge they face here is that unlike regular items not only the requirement keeps changing but even the vendors changes every time making it difficult to control the buying process. The odd requirement every now and then by the various internal departments makes it that much more challenging for the purchase department.
Most of the vendors are usually one man show and there bandwidth is thus limited making it that much more challenging for the buyer. Ideally smart corporate look for vendors with big team as that adds up to the variety of the products and solutions. Vendor with big team are in a position to compete with direct gift manufacturers too as they have tied up with many more factories with ideal capacity thereby ensuring better quality at lower price points. They are in a position to service large orders in shorter time frame due to multiple factories at various locations.
The myth that manufacturer can give lower price is broken every time due to added mark-up of the manufacturers because of expensive marketing cost on one product which is required by the buying company once in god knows how many years? Uniform companies can give better price but then we never consider them as a corporate gift company. Our definition of corporate gift is that what you rarely buy again and again. The moment you buy something again and again then you can close your eyes and deal with the manufacturers directly as due to continuity of business and relationship he can give you better prices. Again any odd item can be added to the basket of corporate gifts. Even what you buy once in lifetime can be added here subject to sizable volumes.
The manufacturer who focuses on only manufacturing minus marketing can provide the better quality product at lower prices due to extra focus and volumes to make up for the lower margin. The business model of focused manufacturer is high volumes at low margin whereas the direct sales manufacturer works on high margin at lower volumes. Yes the one man show corporate gift company cannot beat the price of the direct manufacturer as he lacks bandwidth, volume, expertise and strong relationships with the numerous factories. Due to this false belief and one man army vendors many purchase department believe that manufacturers are always cheaper. Companies and their management have to go a long way to learn that business models decides pricing and not the manufacturing capacity alone.
Our humble suggestions to large buyers will be to go into a contractual arrangements with large vendors as they have the bandwidth and expertise to help you cut down your cost. They will source ‘Everything From A Pin To A Plane’ for you in a transparent manner on a fixed mark up making it a Win – Win for both. You will get their expertise to buy merchandise at the least possible cost and they will benefit from your annual contract to cut down their overheads and pass that benefit to you creating a synergetic platform. Many companies are working on this platform to make their life easy and show sizable cost benefit to their management.