Technology suppliers and excessive margins

So first, what is a margin?

There are two simple elements to a supplier margin. The wholesale cost and the price that you pay for the IT item you need.

Technology suppliers will pay a distributor the wholsale price and then you pay the price the supplier agrees to sell you the product for.

The margin is the difference between these two values.

When Technology Suppliers set very high margins they can become the largest impact on your budget for IT (Tech) products.

You can waste up to 30% of your budget from paying high supplier margins.

Here are some actions you can take both internally and with your Technology Suppliers:

Minimise The Number of Personnel “Buying”
They might think that they are helping out but having too many personnel buying is damaging.

They are using valuable time searching through a technology supplies catalogue that could be better spent on their core tasks.

It is often called Shadow IT. Here are 4 Tips To Avoid it.

Someone might occasionally find a nugget of a deal on Amazon but it will be the exception rather than the rule.

Develop Your Suppliers(s)
Whether it is technology supplies for schools or for private companies look to have open discussions with your technology suppliers about the need to move to a transparent relationship.

All suppliers will be able to provide evidence to confirm the wholesale price they are paying. This can be a screenshot from the distributor channels or a copy of the invoice etc.

We have used an example of what we can see when we look at wholesale pricing in a previous post HERE.

If you meet resistance, find suppliers that are prepared to work with you.

Consider sole sourcing to make your business more attractive even at an agreed lower margin.

Watch The Small Stuff
The range of products is vast. To give an idea of the scale just look at the areas we cover HERE.

Everyone always focuses on the big ticket items but it is low value, frequent purchases that do most of the damage.

Everyday items like Keyboard & Mouse, Printer Cartridges and HDMI cables are consistent culprits.

You might consider the values to be insignificant but understand that margins value of 100’s of percent quickly add up.

We hope that these simple points help you to make a start.

Many Thanks

Neil

P.S.

If you don’t have the time or personnel to make the change, perhaps we can help.