George’s Corner: May 2011

Build the right kind of relationship with your supplier.

Is it the customers or the suppliers who are more important to your rental shop? Certainly you can’t live without either of them. Maintaining excellent supplier relationships is essential to daily rental operations. Rental companies depend on products they can proudly and reliably rent so their customers will return for more.

Suppliers must not be chosen solely on the basis of their product price quotations. Anyone can reduce prices so you can buy cheap. The real question is, what else is the supplier reducing to give you that so-called low price?

There is only so much any comparable product can be genuinely discounted. Sometimes, it is the quality of the product that is reduced. Sometimes, it is the level of after-sales service that depreciates. Sometimes, it is the warehousing of repair parts that disappears. Sometimes, it is the salesperson who usually calls on you who just does not show up anymore. Sometimes, it is the sales person’s commission that diminishes. The point is that something has to be removed if the supplier is to provide continued discounts. These reductions will have a detrimental impact on you either immediately or down the road.

When you think you buy cheap, there is some misplaced implicit notion you are saving money. Good products are priced appropriately for good reasons. Buy cheap and you usually get cheap. You end up purchasing a product that has reduced quality and no doubt breaks down in rental use.

As the product buyer, your challenge is how to choose the right supplier that supports your business for the long term.

Many sales individuals represent agents or distributors promoting a variety of product lines. Carefully interview these representatives to ensure they are authorized vendors of the products they purport to represent. Otherwise, you will end up without the valid warranty service and original replacement parts you will certainly require. Sorry to say, such agents constantly change product lines, stranding rental companies to find their own solutions to equipment issues.

The supplier who should be kept from your threshold, regardless of price, is the manufacturer who sells to anybody with a chequebook. They offer their products and parts not only to you, the rental company but also directly to your customers at the same so-called wholesale price they gave you. This practice makes it very difficult for you to realize any kind of profit. These suppliers destroy the integrity of the supply chain network necessary to ensure a level playing field for the rental equipment dealers.

Thankfully, there are authorized, dedicated, factory sales representatives only selling into such specific commercial business channels as rental companies. They have established a professional and dependable supply chain management system. With this type of product supplier you usually strike up a longer term relationship. They respect your business and sell only to rental companies, not directly to your rental customers.

Ask yourself, how often does a sales representative visit you? Does he sell to just anyone to make a sale? Does she give you warranty and parts support? Does he offer manufacturer’s product training? Does she provide marketing banners and literature to support your rentals? Does he know what he is selling you?

It takes time for both suppliers and rental companies to establish that special trust and mutual respect. So think twice before you accept that deal of the century and free baseball cap.

George A. Olah has more than 35 years of experience in the training,
marketing, and renting of commercial appliances and equipment. He is
presently the general manager of operations at ABCO Equipment &
Supplies, a family-owned rental company located in Weston, Ont.