For procurement and sourcing teams, collaborating with suppliers, effectively communicating business needs, and building and maintaining supplier relationships are critical and often overlooked parts of the strategic sourcing process. While we generally view supplier relationships from the perspective of the Chief Procurement Officer and other sourcing and procurement leaders on the buy side, it is also important to understand the suppliers’ perspective so that procurement can better understand their suppliers’ wants, needs, and challenges and ultimately improve the buying process for all stakeholders.
It is with this in mind that we recently interviewed a supplier – Mr. Anthony Buonocore, President and Owner of Westway Electric Supply, a mid-market distributor of electrical supplies based just outside of Philadelphia – about the importance of buyer-supplier relationships, collaboration, and communication. Anthony purchased Westway Electric Supply in late 2008 and soon invested in its website to build out its eCommerce business. Since that initial investment, he has been able to develop a successful eCommerce business, which now accounts for roughly 75% of total company sales. Anthony notes two things that have helped to fuel this growth.
1. Drop Shipping: The first is the use of drop shipping, which allows Westway to list more than 200,000 SKUs from 30 brands on their website that are directly shipped from the manufacturers to buyers. Since Westway does not have to ship, house, and repackage these items, drop shipping saves Westway money, which it leverages to win market share. Westway does maintain an inventory of ~5,000 items in a small warehouse, but the overwhelming majority of its business comes from drop shipping.
2. Delivering hard-to-find goods: The second key strategy that Anthony credits for his company’s growth is the reputation he has built in selling hard-to-find or obsolete items (which the company locates using online networks, such as iMart and a few others). These networks allow Anthony and his team to issue RFQs for items, search by categories, item condition (new or used), and geographies, and locate sources for their products, particularly unique or out-of-stock supplies that his clients struggle to find elsewhere.
A Small Supplier with a Global Reach
As Anthony told us, “the internet has opened up a lot of options for buyers, forcing suppliers to offer more competitive pricing and better service” to differentiate themselves from the competition. And that’s what Anthony and Westway have striven to do over the last six years as they have grown their revenues and client base in the ultra-competitive electric supply market.
Westway’s clients are primarily buyers from procurement teams in the U.S., but also from international firms looking for obsolete parts. Buyers often come to Westway via email blasts to multiple suppliers thought to carry certain parts or a list of parts. Although this may feel impersonal to some, Anthony sees this as an opportunity to build relationships with new customers and ultimately win repeat business by delivering great service and ultra-competitive pricing. “When I recognize repeat customers, I prioritize them to ensure that they keep coming back.” Indeed, after one or two transactions with the same client, many simply send him lists of items they need to source rather than inquiring with other suppliers.
Westway does not have a formal bidding process, as each prospective client presents a unique set of needs that Anthony and his staff work to meet on a case-by-case basis – where the customer is located, what they’re looking to source, what their competition can offer at what price, and thus how competitive Westway needs to be to win their business. Being small, leveraging drop shipping, and being able to supply unique electric supply items allows Anthony and his staff to cater to repeat customers who know what to expect from the supplier. But as he notes, understanding expectations should go both ways but often doesn’t.
Communication Critical For Supplier Relationships
From Anthony’s perspective, it is critical for buyers to communicate their requirements – such as regulatory requirements, lead times, or payment terms – upfront in the buying process so that orders can be filled in a timely manner. Anthony cited a recent example of how his company had agreed to source items from a liquidator located in another country and provide them to a company in the U.S. After Westway purchased the items, the client asked Westway for a country of origin certificate for all of the items. Because Westway had sourced them from a liquidator, it was difficult to quickly obtain a certificate. As a result, the items had to sit in storage until the issue was resolved. Had the client communicated the regulatory requirement to provide a country of origin certificate upfront, Westway would have gotten it faster and without any additional time or cost invested by Westway or its client.
Likewise, Anthony believes that it is critical that buyers account for lead times and take supplier delivery estimates seriously, which, according to Anthony, they don’t always do. Considering lead times when placing orders, and truly listening to suppliers when they advise on delivery times can set better expectations for all parties, and save them time and money during the sourcing process. Lastly, it is imperative that buyers arrange for fast payment to suppliers, or that they inform suppliers if payment is delayed due to third parties. In such cases, buyers need to apply pressure to third parties to issue payments in order to meet deadlines, since payment delays cause shipping delays. The faster that payments are received, the faster goods can be shipped and buyers’ needs can be fulfilled.
From Anthony’s perspective, building relationships with suppliers, collaborating with them to solve unique business needs, and communicating early and often through the buying process are all ways that buyers can leverage suppliers to greater effect. As much as technology and the internet have turned sourcing on its head, Anthony Buonocore has shown that being a small distributor in a niche market is still very much a people-driven business.
Anthony Buonocore can be reached via email at tony@westwayelectricsupply.com.
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