Many large companies ask their longtime suppliers for ideas to reduce costs. The buyers for these companies don’t assume that their old suppliers will automatically submit cost reductions.

It is easy to place less emphasis on negotiating with good suppliers that you have been dealing with for many years. Suppliers likewise become complacent about your business. Studies have shown that more sales effort and cost reduction suggestions are given to potential and new customers than to existing and long-time customers.

Buyers should make regular periodic efforts to get good suppliers to come up with new ideas and suggestions to reduce costs. These cost reductions can be achieved by changes in the design of a product. For example, it may be possible to change the material from stainless steel to aluminum and thereby reduce the product’s weight. The resulting saving could be in fuel or freight costs.

Cost reduction can come from a lower price, but the lower price does not need to come out of the supplier’s profit. It should come from some improvement in process or change in the product.

A good supplier may suggest standardizing product usage. For example, large companies often limit employees’ choices of office supplies. With no standardization, there are hundreds of different types of pens and pencils that workers order. Limiting choices to a half-dozen will reduce inventory and its associated cost.

Another similar example is limiting the color and number of accessories that salespeople can choose on company lease automobiles. A good automobile lease company can provide information about which colors give better trade-in value and which accessories yield some return on the investment.

Buyers traditionally send out requests for quotations to new suppliers or when a new product is needed but may neglect doing the same for their existing suppliers and for products that have been purchased for many years. Asking the old suppliers to submit new quotes to obtain lower costs can yield significant savings.