Giving Vendors Feedback
A discussion of whether and when to tell tooling vendors that you found a better price elsewhere. September 8, 2007
Question
Recently I had to purchase an ISO tool holder for a CNC router. I called 8-10 different tooling companies. They all responded with a quote and prices. The prices averaged about the same except for one company. Their price is lower than all the others, not by much, but significant enough. The company I work for is very small and due to budgetary reasons can not spend as much money as other companies. My supervisor decided to purchase a small amount of tools from the company which had the lower price. My question is, should I inform all the other companies which sent a quote for this tool regarding the lower quote I received?
I always do research before purchasing any item such as cutting tools or machine components because I know from experience that some suppliers and/or machine manufacturers have exorbitant prices, to say the least.
Forum Responses
(CNC Forum)
From contributor F:
You don't owe them any notification at all. Your lack of purchase order will tell them you went with someone else. If they call back and ask, you can tell them why.
From contributor Y:
I would agree with contributor F, unless you have a vendor/salesperson that you deal with frequently for similar purchases. That way they know that you are shopping around and even though they lost this sale, they might give you a better price on a future purchase.
From contributor J:
I usually inform most of my vendors of that situation because I know they are reasonable people. If I'm in their shoes, and I am, then I want to know if my prices are competitive. But that doesn't mean I will reduce my prices if I will lose money.
From contributor T:
I usually inform them if they ask. I tell them not to beat them up, just to inform. A hardwood supplier asked me about a job he knew I got, but didn't buy from him. I told him it was economics. His price was about $.75 to $1.00 more per bft. He appreciated my information and explained he uses the info to inform their buyers to do a better job of purchasing.
From contributor G:
Because you are a small company, your buying power is probably not the best in regards to price. Calling 8+ companies for a quote is a lot. I'm guessing that some of the companies you called are vendors you deal with very little. You may not be getting their best price. The company you deal with most often that gets most of your business should have underbid almost everyone. If they didn't, then that would be the only company I would contact to let them know you found the product for less money. This should keep them on their toes. Sometimes these vendors get lazy with their pricing and are not aggressive enough in order to keep your business.
Another scenario might be that the one vendor lowballed you to see if you would actually buy from them. I've done this before when I get many requests without ever receiving an order. I will give out a lowball price. A price too low that no one would pass it up. If the order comes, then I know they only buy on price. If the order doesn't come, then they are probably giving my price to their favorite vendor to match. If the latter happens, I stop quoting to them as I am only being used as a barometer. A waste of time.
Again, there is really no need to contact these companies with your purchasing results. A good company will follow up with you and you can discuss the situation at that point.
From the original questioner:
The supplier we deal with on a regular basis had the best price until I received the quote from a company I have never called or dealt with before. The company is a German manufacturer, so quality is not an issue.
The only problem is that for some reason our current supplier became irate after we told him we received a lower quote and could not understand why we even considered buying from any other supplier.
This reaction to me seemed childish at best. It's not like I'm on the payroll for the regular supplier so I don't understand the reaction over a purchase of 4 tool holders. If I'm working for a company, I have their interests first and foremost in mind, not the suppliers. Thank you for your input.
From contributor G:
You are correct in thinking their reaction is childish. As I mentioned above, your regular supplier got lazy and didn't give their best price. It sounds your buying philosophy is similar to mine. I ask my suppliers to simply give me their best price first and only their best price. This way if someone comes in lower, I know which vendor to go with. I don't have to waste my time asking suppliers to see if they can do better, as they have already given me their best price. When a regular supplier sees that you are purchasing other places, their prices start to come down. At that point you are really getting their best effort all the way around.
From contributor S:
I flat out tell whoever I am calling that I am shopping around for "X product" and what the volume is and when I need it. I will also ask them if they recommend anyone else for a supply on hand. Our regular venders know that we spend money and that they, and us for that matter, are not the only game in town. I try not to bog them down with stupid questions about applications and such, just a quick price and delivery date and then on to the next vendor. We generally don't force a vendor's hand and say that their competition is cheaper and ask them to match unless they ask us to call back with the best price that we find. A good sales rep will know what the prices are from his competition and will quickly tell you if they can beat them or not. If they can't beat the competition, they need to throw something in to sweeten the deal and do it fast. Free delivery or ready to pick up right now or a deal on an associated item or even a deal on something off the wall that we made need or want. Sales can be a tough job and we hate it when one of our regular sales reps moves on and someone else gets our account, because the new guy tends to have his own bread and butter customers to take care of and we fall into the "Deadmoney" pool until we work our way up again.
Just because of the wait-until-the-last-minute mentality of my company, we end up paying the premium for speed. This is where the guys that keep stock on hand get their money back for their overhead. And yes, for some reason I always tend to be the guy at our place that has to find it right now! What's that? Yes, I can have a guy meet your delivery truck at the state line before he makes a delivery to three other places before he gets to your warehouse!
