When I hear discussions about the renewed interest in lower pricing from hospital administrators, purchasing managers, and the like – much of it to do with reimbursement pressures associated with health care reform - I’m reminded of the quote by Leon M. Cautillo, “The bitterness of poor quality remains long after low pricing is forgotten!”
Though low price is a logical pursuit in the current environment of reimbursement control and reduction, those who make these requests must be mindful of the trade-offs that are a necessary part of this process.
As opposed to the simplistic angle of cost cutting, a far better approach is to look at the entire value stream built around a number of factors, not the least of which are the efficiencies created by a strong working relationship between the customer and the supplier. From customer service and sales rep responsiveness to consistent order fulfillment to fair and reasonable return policies you must evaluate the entire package offered by the supplier when assessing the “net” cost of doing business with them.
As long as there are customers to be served, you will have suppliers who will compete to differentiate themselves and, in so doing, will more than likely deliver more than just the product or service that you are buying. Indeed, you’re buying a product and service package and it’s important to recognize this when negotiating the price.