Paying too much for rubber gloves or lab work?

by Admin, Finance

Typically we use suppliers because we get into a habit, and usually existing customers are treated less well in terms of incentives, pricing and even service delivery than new customers. In essence they get taken for granted.

If you want to fix that then I strongly suggest you review all your suppliers from Henry Schein to the great lab you have been working with for the past seven years. In all probability you will pay less and receive improved service delivery — your suppliers will most likely remain unchanged.

This is how to do it 

Establish a list of purchases, split between consumables and non-consumables, for the last 12 months. Establish the total value less any discounts — if you have multiple suppliers, keep each separate. The decide your SMART objectives (specific, measurable, achievable, relevant, time bound), for example: single supplier, faster service delivery and improved terms of 7.5% overall, within 60 days.

Write to three suppliers and say that you are reviewing your account and ask if they are interested in pitching for all or part. Invite them in and give them a briefing document with the following information:

  • Your shopping list for the next 12 months, split between consumables and non-consumables
  • Service delivery — for each of the categories list the delivery period you require from order
  • Preferred ordering protocol — electronic order number etc
  • Invoicing and payment terms
  • List your required returns policy
  • Ask supplier to list discount structure in detail including any additional volume incentives
  • Ask supplier to submit their proposal in writing within 14 days
  • Ask for two supporting references
  • Make it clear that you are talking to three suppliers — DO NOT disclose their names
  • Explain that once you have appointed a supplier[s] the agreement will be in place for two years and all prices and conditions are in place for that period
  • Write to any supplier after the appointment of the new supplier advising them that they have not been successful but thanking them for their time and service but your new supplier takes over from April 1st, etc.

If you have not got time to organise this my team can run the process for you, or if you have any questions please call me.

Best wishes


07860 672727

JJF 10

“In all probability you will pay less and receive improved service delivery”

Jonathan Fine, MD
Author: Jonathan Fine