Don’t be afraid to stir the pot to get the best prices from vendors.
Printed circuit board buyers face a challenging environment in 2023, with rising prices for raw materials and freight, along with the continuation of tariffs. A solid board-buying strategy is going to be more important than ever. Does your firm have one?
PCB buyers who do not routinely review the performance of their vendor base are perhaps too comfortable in their jobs. It’s a core buyer responsibility to keep vendors competitive in pricing, and it is management’s job to ensure buyers are not so overwhelmed with other responsibilities they neglect that core duty. Management should also ensure that buyers and PCB salespeople are incentivized to bring prices down.
Unfortunately, I see companies that purchase PCBs make the same big mistake year after year by investing too much of their annual spend with a single supplier. That could prove to be costly in the coming year.
I understand and appreciate vendor loyalty. But in the customer-vendor relationship, which party is doing the leveraging?
Companies that stick with the one-vendor approach will have a hard time remaining competitive. “We have used this vendor for years” is not a viable strategy.
The problem is, as your relationship with your suppliers continues, it’s easy to get complacent about pricing when a particular vendor’s quality and delivery are satisfactory. It’s easy to shift more work to that vendor or even to only a couple of vendors that are performing well, and then fail to keep a close eye on pricing.
Failure to regularly check what existing vendors are charging against that of potential suppliers could mean money left on the table.
If quality and delivery performance among your present vendors is comparable, you need a way to ensure you’re still getting the best prices. Buyers should always work to keep vendor pricing in check. They should regularly seek offerings from other vendors to compare with the prices they’re getting.
One way to do this is an activity that I call “quoting for fun.” Don’t hesitate to give potential vendors a shot at quoting an ongoing project “for fun.” Let potential vendors know it’s an existing project and you’d like to see where they stand on pricing.
This will provide a useful benchmark against which to measure your current vendors’ pricing. And if there is a significant per-board price difference – especially if there are quality or delivery issues with a current vendor – it may turn into more than just fun. It may give you another vendor to add to your base.
While a few pennies per-board difference in price is not worth switching vendors if you’re happy with existing ones, it’s wise to always keep your options open. This practice will also help keep your vendor base on its collective toes. Let vendors know right at the beginning of your relationship that you’ll be regularly evaluating their performance in all areas, including pricing.
Other ways to stir up your PCB cost pot include:
Price checks. A vendor that is too comfortable with your business will usually charge you more. Let all your vendors know you will be testing the waters and comparing their pricing to others. Then be sure you follow through on that. Don’t be reluctant to bring on new vendors if necessary.
Keep a scorecard. How often do you review the performance of your vendors? A vendor that is regularly evaluated for on-time delivery and quality acceptance in comparison to its competitors will generally also offer better pricing.
Vendor visits. Demand your vendors pay a visit to your operation. The more business they do with you, the more visits should be required. The more excited the vendor is about your operation, the better the service and pricing will be. If a vendor doesn’t visit, this means they are too comfortable with your business and that likely means you’re paying too much.
Pay on time. The one thing the vendor should never have to worry about is on-time payment. Consistent payment makes it easier for you to demand better service and pricing.
Get trained. Training in the right way to buy PCBs will show you how to leverage your annual spend, negotiate for lower board pricing, and get better payment terms. It will also give you the confidence to move business from one vendor to another, when necessary. A well-trained buyer will be able to strengthen and manage a high-performing PCB vendor base.
Henry Ford said it best: “Competition is the keen cutting edge of business, always shaving away at costs.” That applies to PCB vendor pricing as well. Keep your vendor base on its toes. You can lower costs, with minimal risk to your manufacturing operation, by ensuring all your vendors feel the need to remain competitive.
For 2023, supplier diversification is vital to your success. •