Welcome back to the fifth installment in a series of case studies designed to test hypotheses I have regarding how supplier size needs to be factored into sourcing and supplier management approaches.

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While the first four posts have focused on big suppliers, today’s will discuss our experiences with a small supplier – Karen Oakley Designs. Karen Oakley Designs is a one-person firm specializing in graphic design for projects like print advertisements, marketing collateral, and the like.

Let’s begin by considering the four primary dimensions of supplier performance: cost, quality, delivery, and service.

First of all, in the graphic design industry – specifically graphic design for print ads – quality and delivery are probably the two most important dimensions. Quality is important because, without an attractive design, no one will notice or be attracted to the ad that you just paid big money to place in a magazine. Delivery is important because publishers have firm deadlines by which they have to receive artwork (and most clients like Next Level Purchasing are always deciding to advertise at the last minute).

Second of all, the graphic design industry is full of firms that nearly rip off their clients with their pricing. The “creative process” is one that can’t be timed like creating a widget to a standard specification, they argue. And no two designers will create the same ad, so it is unfair to compare them based on cost.

Hogwash.

When you find a designer that is tuned into your brand and can produce work that delights you at a reasonable cost, you’ve been successful in your sourcing. Karen Oakley Designs does just that.

But perhaps Karen proved her value the most when we were creating the SPSM certificate in 2004. We wanted a beautiful, full-bleed, heavyweight certificate that could be personalized quickly with minimum printing costs. That sounds easy but, specifics aside, it wasn’t. Even though it wasn’t really part of Karen’s scope of work, she brainstormed and suggested a brilliant solution that was everything we needed but couldn’t figure out on our own.

There is a danger of getting comfortable with a supplier and, before you know it, end up paying way too much. Every purchasing professional who has been around a while finds him or herself trying to convince an internal customer that an incumbent supplier is taking advantage of them.

So, no matter who your supplier is, it doesn’t hurt to benchmark pricing as the relationship continues along.

We’ve done that with our design work and Karen Oakley Designs is always competitive with similar one-person design firms. I’m not saying that Karen Oakley Designs is the least expensive 100% of the time, but Karen Oakley Designs is never grossly overpriced compared to other reputable one-person design firms.

And those one-person design firms are always more competitively priced than big design firms. Just for kicks and giggles, we got benchmark pricing from a big design firm for a piece that Karen Oakley Designs charged us $175 for. The big design firm quoted us $2,000.

Do I feel that the quality would have been better by going with the big design firm? Heck no!

And, in deadline constrained procurements, it is important to have a relationship with supplier personnel that can control the outcome. We’ve always had that with Karen Oakley Designs. I can’t say that would be the case with a big design firm.

Oh, so how did we find Karen Oakley Designs? Through the referral of someone who had been a client of Karen’s.

So there are many good reasons to use a small supplier when you can. Can there be disadvantages and big risks, too? You know it!

So there is one more case study coming in this series before I tie all of the case studies together and begin distilling them into lessons and guidelines. Stay tuned!

To Your Career,
Charles Dominick, SPSM
President and Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
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http://www.NextLevelPurchasing.com

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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