Should you price shop or become a prime vendor? Here's a list of considerations and questions to ask your distibutor. At the end of the day, it's all about getting the best value.
Personally, I think cherry picking — buying item by item from your distributor purely on price — is a myth. A case of leeks may cost $25 from Supplier A and $40 from Supplier B, but nine times out of 10 it's a question of product specifications, not supply and demand. The market is too efficient to have huge discrepancies in costs. And when specs aren't the reason for the price difference, it becomes the grocery store game. You save 50¢ on one item and spend an extra 20¢ on the next three items in your basket.
I learned early to give the majority of my business to one broadliner and make sure that I got value — as I defined it. As a loyal prime vendor customer, you're very valuable to a broadline distributor. In addition to fair prices, you're entitled to some perks. The trick is finding a distributor who delivers what you value.
Honesty is the best policy — from you and your distributor. Be up front with what you want and need, and insist on that same honesty in return. I believe a lot of time, energy, and effort can be saved if you address the "deal breakers" early on.
DEAL BREAKERS: Good things to ask your distributor up front:
- Based on my current order guide, what items can you deliver?
- What are your recommendations for the items you don't carry?
- How do you handle special orders?
- Based on my drop size, can I have the delivery schedule I want? If not, is it possible to pay a drop charge to get the delivery schedule I want?
- Can you deliver in the two-hour window we agree upon?
- Can you assist me with recipe costing from your laptop?
- What kind of specialists does your company employ?
- What kind of access can you give me to brokers and manufacturers?
- How are you compensated?
- Can you provide me with ideas and tools to train waiters/waitresses, improve employee retention, and comply with safety and sanitation requirements?
It all comes down to how you slice it, how you define value. If you're a price shopper, cost plus 15% without any frills may be for you. But if you'd rather have three deliveries a week, stringent adherence to product specs, and access to real business development tools, a prime vendor relationship at cost plus 20% may be a better way to go.
Here's my recipe for a successful distributor relationship: define value for yourself, ask the questions above, add your own questions to the list, find a distributor who shares your values, set mutually acceptable goals, establish tolerances or variances to measure compliance, and keep the lines of communication open.
I've taken the list above and started a Distributor Interview Questionnaire plus added some additional points for your consideration.
Most distributors are fair, reasonable and extremely motivated to get your business and keep you happy. It's your responsibility to let them know how they can do that, and to treat them with the same respect you'd like to be treated.
After your employees, this is the most important relationship you can nurture.