We all have those good friends who ask for our advice, and don’t take it.

So, one of my close friends bought an older house down the road from me, and the house needed a lot of work. In fact, the entire property was a wreck. We’re talking septic system, water supply, outbuildings, dock, boathouse……you get the picture.

My friend asked me if I knew a good contractor to help him with the project, and, without hesitation I told him all about “Mark”, the contractor who had done several projects for me over the years. I patiently explained to my friend (his name might as well be “Cheap”) that Mark was expensive, but was trustworthy, loyal, and provided awesome service.

Well, Mark and Cheap got together to look at the property, Mark gave Cheap a cost estimate, Cheap got a few other estimates, and Cheap went with the lowest cost contractor to save a few dollars.

You know how this story goes from here, because you have probably made the same mistake. Cheap ended up having to manage the project because the contractor hardly ever showed up, subcontractor’s work often had to be redone, cost overruns were a weekly occurrence, and the worse part was Cheap having to explain to Ms. Cheap why it was going to be “just a few more months” before they could move in.

After this ordeal was all over, Cheap quietly mentioned to me one day that he wished he had hired Mark to handle the project in the first place; the total cost of the ordeal was a lot more that Mark would have charged, not even factoring in the constant arguments between Mr. and Ms. Cheap.

What does this experience have to do with business?

This ordeal reminded me of something that Dr. W. Edwards Deming taught us many years ago about “supplier relationships”. Dr. Deming said: “End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, built on a long term relationship of loyalty and trust.”

Unfortunately, especially these days, critical considerations like service, integrity, loyalty, trust, responsiveness, are overlooked when choosing or evaluating suppliers, and the focus is on price tag alone. In fact, some say they want a “great partnership” with their supplier, but, in reality, they just want a “cheap vendor”.

For our businesses, I think we need to remember:

  • The bank (and bank officer) that made that loan that helped you start your business years ago.
  • The IT service provider that was there at 4am to get your computers running so you could make deliveries that day.
  • The accountant who answered all of your questions throughout the year, and did not bill you for every 5 minutes he spent helping you.
  • The equipment provider that extended generous payment terms, recognizing that your business was going through a tough time.

I hope you enjoyed this issue of Taking Action, and I encourage you to apply this “total cost” thinking as you choose or evaluate your supplier partnerships.

This month, as we enter our 23rd year, I am especially thankful for so many great relationships, based on loyalty and trust, we have enjoyed over the years.

If you would like more information about how we help our clients increase their profits, please contact me via email (doug@thedougwilliamsgroup.com), cell phone (305-926-7526), or at our corporate offices (305-964-5595). You can learn more about us by viewing our website (www.thedougwilliamsgroup.com).

Warm personal regards,

Doug Williams

Chief Executive Officer