10 steps to reduce operating costs by 40%. You have got this far through the tough economy and vendors and service providers need your business.

Remember the 80%/20% rule. This task should not be given more than 30 days to get done.
You need to get the unit prices down to the level paid by your competitors so that you can yield the higher cash flows when the we stop going down and the up turn comes. Remember, as each day passes and the economic down turns get's closer to the end your negotiating leverage for lower prices is diminished. When the up-turn comes you will have to wait 3 years and another downturn to get the rates you must negotiate now.

Its' simple.....

1. List you top 15 vendor/service providers by the amount of spending in the past 24 months
2. Estimate how much you will spend with each of these vendors/service providers in the next 24 months
3. Make a copy of your vendor/service provider invoices for the last 3 months.
4. Find two alternative vendors/service providers for each of the 15 product/service categories already being provided. Find their websites, print-off and read. Use the internet to get ratings on each of the potential new vendor/service providers.
5. Arrange for one of the two potential alternative vendor/service providers to provide a competitive quote based on your projected 24 month projected volumes. Avoid providing prospective vendors copies of invoices from existing vendor/service providers or details of current pricing and terms.
6. Contact your existing vendor/service providers and request a updated quote. Start this process at the same time you contact alternative vendors/service providers. Mention that you have a company wide project underway to make sure that your costs are in line with current market rates. Your own customers are demanding that you do the same!
7. Insist that existing vendors and prospective vendors provide blind quotes. Don't let your supplier give you a quote that is anything other than the best and final.
8. Meet with your existing vendors if they are not the lowest and agree on the the lowest quoted price if possible. You avoid the cost and time required to switch suppliers. Consider having 2 suppliers. Give one supplier 75% of your business and promise the other supplier that you are always willing to switch if price, service and quality of product and service can exceed the preferred supplier.
9.Before you agree to anything, make sure that a there are no hidden costs/expenses. Have the supplier price out an indicative delivery for the next month or 3 months and initial it.
10. In these times the value of discounts for early payment or extended payments terms can be of great value to your business but make sure that you have negotiated the rates for normal payments terms before switching to payment terms.