What To Consider To Get The Best Deal on Inputs

With margins tight, input costs and price negotiation are top of mind. Purdue University’s Mike Boehlje and Michael Langemeier say this strategy isn’t uncommon. But if you’re only focusing on price, they say you might be going about it the wrong way.

In a new article, Boehlje and Langemeier write that making smart input decisions is more multi-faceted. They outline 12 different factors that should be taken into account when considering a purchase.

1. Product performance
   How effective is the product in protecting or enhancing your yield? What research is there to support those claims?
   
2. Product price
   Are there any additional shipping and service fees to consider?
   
3. Quantity/volume discount
   What will the price be if you buy more product or bundle it with other products from the supplier?
   
4. Storage, delivery time and conditions
   How is the product shipped and stored? What’s the penalty or alternative option if there are delays?
   
5. Technical documentation
   How has the product performed? What are the characteristics?
   
6. Local contact
   Who can you call if there are problems with the product or order?
   
7. Application services
   What’s the cost and timing?
   
8. Financing terms
   Is there a cash discount? What are the interest rates, repayment terms and approval process?
   
9. Warranty
   What are the product guarantees? Is there a reimbursement program? Who is responsible for servicing the claim?
   
10. Complaint response time/process
    What’s the procedure for filing complaints for the product?
    
11. Technical support
    Who will be answering questions and how long will it take?
    
12. Information services
    Are there fees charged for information or data analysis? Who’s the contact?
    

It might be helpful to discuss the supplier’s cost structure as well.

Comparing Notes
Boehlje and Langemeier recommend assigning a weight to each of these factors that is specific to your operation and then comparing the total score from different suppliers to make the most informed decision.

They’ve created the sheet below to help keep that information organized.

(Purdue University Center for Commercial Agriculture)

Boehlje and Langemeier write that it’s important to remember building a strong relationship with your supplier may provide benefits beyond the purchase of a single input, including providing cost savings in other areas of the business.