The Dark Side of Hidden costs

When you researched your suppliers - asking for and following up on the references they were happy to provide - you used the feedback to select the right source of goods.

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Because if you didn't delve into the reality of their service levels - and how specific or precise their claims procedure is - you might be very dissapointed.

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The number one point to investigate is their warranty policy - and how efficiently they execute their quoted process and honour their statements. What will they cover? Is the document a robust, realistic outline of actions they are willing to cover and rectify - or just a loose statment open to interpretation?

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An insufficient warranty process has significant costs to your business.

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EXAMPLE

You buy 10 items from a supplier. A customer returns with one with a breakage that is in a 'grey area' of the brand's policy of cover. You can see both the customer's point of view and understand the supplier's decision. But you need to rapidly action and remedy the customer's expectations to keep them happy of your backup and service standards regardless. To avoid losing the customer you replace the item, but the brand do not rectify the case fast and eventually refuse the claim. You have effectively just paid 10% more (and cut your margin by an even higher %!) for all of the other 9 items on your shelves.

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Lessons learned

• Only work with suppliers offering unconditional 'No Questions Asked' warranty policies. E.g., 'Comprehensive 1-year unconditional warranty' & '2-year manufacturing faults' cover. 
• Policies should be examined thoroughly. Question the sales reps hard on the wording and interpretations. Do not accept any loose answers or vague responses.
• Follow up on references and ask other customers if the supplier acts fast and actions their policy/replacements unconditionally and swiftly - and sorts the ambiguous details out later.
• Does your supplier have your end customer or mind or not?
• Again, suppliers holding consistent stock are also important here so that replacements can be expedited immediately.