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  • The Design Firm and its Suppliers

    Filed Under: Tools and Resources,

    In this age of ever-changing design, what applies to one kind of company may not fit another. If you are involved in print, you'll have an entirely different group of suppliers than those supporting a design firm specializing in Web pages or multimedia. Some design firms are part advertising agency and part direct marketing company. Some are corporate or government in-house design groups using outside design consultants. One common denominator links us together: high ethical standards. Business ethics aren't as easily taught as selling techniques because ethical questions are often complex and vary from one situation to another. In selling, there are tried and proven approaches that work for any business, whether it's graphic arts or insurance. An ethical problem, on the other hand, doesn't always offer a clear solution and each needs to be approached on a case by case basis. Because two cases are never alike, each needs to be analyzed carefully. If you feel you don't know the correct answer to an ethical question, call a respected peer. This will usually provide you with the right solution.

    Your Suppliers Are Your Company's Life Blood

    A company without suppliers is like a person without food and will starve. As people need nourishment, designers need businesses that support them. We must realize that, because they support us, they are no less important than we are to our clients. There is an old saying, “We are only as strong as our weakest link.” If our suppliers let us down, we will let our clients down and, ultimately, we become the real losers. It is important to forge a strong relationship with each of our support businesses. The most successful companies include their suppliers in their successes. Many companies use holidays to send gifts of appreciation to their suppliers. They feel that this is as impor- tant as sending gifts to clients. If you think about it, clients come and go, but suppliers are always there for you.

    The Food Chain of Design

    When we think of our suppliers, we often take a lofty position in the food chain of design. After all, we're the important folks. We make it all happen. The buck stops with us, or does it? Aren't we suppliers to our clients? The U.S. government labels designers as vendors. Our clients often see us as a necessary evil-suppliers with an attitude. As a rule, we abhor spec work. We are in disdain of any client that stalls in paying us for services rendered. We want to lynch anyone reselling or reusing our work without due compensation. In essence, we feel we must be treated fairly for work we have produced in good faith and through due diligence. Unfortunately, we don't always see our suppliers in the same light. We think to ourselves, “They're there to make us look good or they won't get anymore of our valuable work.” It's human nature to view things from our own perspective. Successful designers realize that they must be respected as good business people. If we are anything less, we will lose the respect of our clients. After all, if we can't control our own bottom line, how can our clients trust us to help them control their bottom lines? In this age of “partnering,” clients don't want vendors. They want a more interactive relationship with design and their designers.

    If we are a part of our client's team, then our vendors must be part of our team. We need to know the rules of doing business the right way. If we don't, we may end up with a bad reputation among our suppliers that will be irreversible. To think they don't communicate with each other is to forget how much we communicate with other designers.

    Rules for Working with Suppliers

    Never falsely represent yourself or your needs.

    Asking for a low price to receive potential work is a prime example. You hate it when this carrot is dangled in front of you by a potential client. If no lucrative work follows, you'll only make this request once because you will have lost the respect of the vendor. And, more than likely, lucrative work won't follow. Even if made in earnest, this promise is a jinx.

    Don't ask for speculative work.

    Asking freelancers to do what you would never do-speculative design-plays on their need for work. Some design firms will only pay a freelancer if the work that is done is accepted by their client. No other industry would think of asking a worker to do this.

    Asking a printer for free work for future projects is an example of “work for ransom.” For example, you ask a printer to print your company brochure because of a big project in the offing or the promise of an account you really don't have control over. This is just another form of asking for spec work.

    Never ask for under-the-table remuneration.

    An example of this is a finder's fee. This fee should be a onetime commission agreed on in advance and paid to you for work you've brought to a supplier. Let's say you are purchasing printing for a client or referring a client directly to a printer. You tell the printer that you expect a commission for finding this project. The fee should be agreed on in advance, not brought up after you've referred the printer to this account. You also should not expect a finder's fee to be a continuing royalty for future work. Just like it sounds, it is a fee for finding a client, not for keeping your client happy. We all know the names for unethical commissions given: under-the-table kickbacks, payola, hidden commissions. Ethical commissions are added to the top by the supplier or taken as a markup by you, if you are purchasing the service for your client. A good rule to follow is, “If you can't explain your commission to your client, it's wrong.” And, you shouldn't always expect a commission; suppliers don't have margins of profit large enough to make sure there is always something in the job to pay you a commission.

    Don't take unfair advantages of a supplier in a captive situation.

    An example of unfair advantage would be a design firm coercing an inexpensive printer into a team situation on a design and printing project. For instance, a magazine is sent out for bids to three designers and three printers. The design firms are all competitive in pricing and caliber of work. Two of the printers are known to be expensive and the third will most certainly be low. One of the design firms controls a substantial amount of work done by the inexpensive printer. The design firm forces the printer to agree not to offer a quote to the magazine publisher without including a quote for its design work. Other design firms and printers bidding separately stand less of a chance of staying competitive. The “combined only” bid makes the design firm look good, but severely limits the printer.

    Don't prepare vague Requests For Quotations (RFQs).

    This is deliberately asking a vendor for a price, knowing that you have room to get more from the vendor than it would normally give. An example of this is confusing a photographer or illustrator by minimizing the actual assignment which, for them, will mean more time than they've included in their estimate. If you are sincere in your RFQ, do your homework so there are no loose ends. We as designers are often given vague specifications by clients out of ignorance. Creativity is hard enough to price, but open-ended specs can be disastrous. A good example is an RFQ for the design and production of a publication with no mention of the number of pages. The bidding firms aren't mind readers and, unless the scope of work is defined by the client, a bid is useless.

    Don't ask suppliers for materials that you know won't lead to a sale.

    Stock photography is often a victim of cavalier designers. For years, advertising agencies would use stock photos as images for major campaign pitches without paying for them. They would order the images for consideration, use them for layouts, and then return them. Now, stock houses charge a research fee to protect themselves from unscrupulous designers. Other unscrupulous design firms scan the images right out of the catalogs, or know that if they use the actual images they can lie about the extent of use.

    Paper merchants are often also victims of misuse. Typically, a designer will request paper samples or dummies and make up a layout for the client. The finished work is then turned over to the printer, which is when the problem can crop up. Paper mills typically let more than one merchant carry their products, which allows printers to shop price. The friendly merchant who helped the designer may never get the final sale. Designers can do several things to alleviate this situation. One is to let the printer know that a certain merchant has been a great help, and you would like them to be considered. Another is to let the paper merchant know who the printer is. This at least gives them a chance to approach the printer. The optimum is to make the paper merchant part of the bid process. This can be done by simply including the merchant within the printing specifications. In your RFQ, tell the bidders that your paper merchant will be the only supplier used on this specific job. You may get some disgruntled printers, but at least they all have the same restriction. While you may be in the minority of design firms doing this, you'll have the undying gratitude of the paper merchants.

    Don't mislead suppliers in billing procedures.

    When it's always been assumed that you'd be invoiced, telling the supplier to bill your client at the end of a project is taking unfair advantage of a situation. The better your relationship is with the vendor, the worse the sin. If you know your client is slow in paying,this procedure is unforgivable.

    Don't provide false schedules.

    The opposite of building in time so that there will be a cushion for both you and the supplier, a false schedule is one that you know you will have to compress later on. If the supplier knew the real schedule, overtime would have to be a factor in the quote. Clients often provide false schedules to designers to get a quote for a normal turnaround, after which they compress the schedule. Doing this to your suppliers is not fair play.

    Never establish new credit terms after a job is completed.

    If you know you can't live with thirty-day terms, be up front about it. Your suppliers are not in business to finance your business. Never agree to credit terms you know you can't adhere to. This is false representation and will come back to haunt you when you need this supplier. Your word is your credit and vice versa.

    Don't reject work to elicit corrections of your own mistakes.

    Printing is often a vehicle for this type of abuse. The scenario is: a printing job is commercially acceptable, but the designer or client has made a mistake. Because of a minor printer's error, the designer then demands a reprint and asks for additional changes or corrections. Most printers will not make any changes other than correcting their own mistakes, and designers should not ask them to correct more than that. In fact, because reprints are often a way for a customer to correct their own mistakes for free, printing trade customs specify that printers should only correct their own mistakes. Unfortunately, some printers may be hungry enough to break this rule. Fortunately, most won't.

    Protect yourself, know your liabilities.

    Take proper precautions when the property of suppliers is in your possession. Some materials won't need to be returned while others may be originals that require insurance coverage on your part. Stock photography is a good example. If lost or destroyed, an original transparency from a stock house is worth $1,500, and you are responsible for insuring it. A designer I know once ordered stock photos on different subjects from several stock houses. The eager stock houses sent the designer more than 500 transparencies. When all was said and done, the designer had $1,500,000 worth of original material with his normal business insurance covering one-tenth of that amount. A small fire, a disgruntled employee, or an unfortunate accident could have wiped the designer out. By calling his insurance agent, the designer was able to get a rider on his business policy that would increase and decrease as the transparencies were accumulated and then returned. The best way to cope with unforeseen loss or damage of materials like stock photography is to list every scenario and every type of valuable paper in your possession, or that could possibly be in your possession. Then find out from your insurance agent what coverage you need.

    Treat your suppliers as you would like to be treated.

    We will get far more positive response when we offer our suppliers the professional respect and consideration we expect from our clients. If we don't, we'll get more than just bad service, we'll also acquire a bad reputation, which may be irreversible. Think about the suppliers you've been warned about and remember, word travels quickly.

    These are some, but hardly all, of the ethical abuses that may tempt designers as well as their clients. To better understand business ethics and liabilities, ask questions first. Every facet of design has experts available to answer your questions. While you can't go to jail for abusing ethics, you can ruin your reputation with your suppliers and impede your ability to compete successfully.

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