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5 Hidden Costs of Using Multiple Suppliers in the Cannabis Industry

Emerald Scientific

Purchasing equipment and supplies is an almost daily task, with businesses often overly focused on finding the lowest price. There are several hidden costs with price shopping however that many cannabis businesses may overlook. For instance, productive time lost continually comparing prices from multiple suppliers, increased administrative expenses, higher shipping and transportation fees, and higher logistics costs just to name a few.


In addition, working with multiple vendors can create a fragmented and complex supply chain. This can lead to an increased risk of quality control issues, order delays, logistical errors, supply chain disruptions, and limited negotiating power.


Although there may be scenarios when making multiple purchases from several different suppliers makes sense, working with one, single-source supplier that understands the cannabis industry will immediately simplify your operations and help improve your bottom line. Not to mention that consolidating your orders will really ramp up your buying power!


Your typical purchasing process may historically have been selecting the lowest market price for an item, and ordering from however many suppliers were was needed to find that low price. But shopping with multiple suppliers is most likely costing you more in the long run.


Follow our “5 Hidden Costs of Using Multiple Suppliers in the Cannabis Industry” series over the coming weeks to learn more about improving your competitiveness in the market, and your profitability, by leveraging the benefits of partnering with the right supplier. We’ll be taking a deep dive into the most common cost challenges of price shopping in the cannabis industry, including:


1.    Quality Control Issues

Due to disparate processes, standards, and quality control measures across suppliers, the risk of product inconsistency is greatly increased. This can lead to customer dissatisfaction and even damage your instrumentation or worse, your company’s reputation! We’ll explore how working with one supplier will free your team to focus on quality control and ensuring the job is done right. 


2.   Increased Administrative Costs

Is your team bogged down with time-consuming paperwork, chasing communications from mulitple suppliers, tracking, and countless order-related administrative tasks to manage? This lost productive time can be costly and often requires specialized skills that your staff may not have, especially for smaller cannabis businesses. In this chapter we will review the most common overhead costs incurred when using multiple suppliers, how those can add up rapidly, and how using one supplier requires far less administrative work – saving you both time and cost.


3.   Supply Chain Disruptions

The supply chain has been a challenge since early in the pandemic, and many struggles continue to plague the industry. Trying to work with multiple cannabis suppliers further increases your risk of supply chain disruptions, negatively impacting your ability to deliver products to customers. This can result in lost revenue and damage to your brand’s reputation. Be sure to catch this overview of the various aspects of the supply chain, how they may be further complicated by ordering from multiple suppliers, and how those complications can affect your bottom line.


4.  Increased Logistics Costs

Every company has its own shipping and delivery processes, so it is no surprise that each supplier most likely will also have different shipping and delivery requirements. This can result in your company  experiencing higher transportation costs, longer delivery times, and increased inventory management costs. Additionally, when every supplier has a different turnaround and delivery time, it can be hard to keep up with the different stages and requirements needed to order, receive, and inventory materials and products from different suppliers. 

In this edition we will take a look at how ordering from multiple suppliers can become a logistical nightmare for your team, and unnecessarily drive up costs. 


5.   Limited Negotiating Power

We’re all familiar with the concept of quantity discount pricing. From the big box stores to the local groceries, package deals are always a good way to save money. So why not apply this everyday purchasing habit to how you run your business? When you use multiple suppliers, you lose the negotiating power of buying in quantity. Each supplier has a different pricing structure, making it difficult to negotiate (and win!) favorable pricing and terms when making limited purchases. Don’t miss this discussion about the higher costs and lower profit margins that result from focusing on individual item price across multiple suppliers versus the overall purchasing power your cannabis business will gain from working with one single-supplier. 


Cheapest Isn’t Always the Most Obvious 

While using multiple suppliers may seem like a good way to cut costs and increase profits in the cannabis industry, it is important to be aware of the hidden costs associated with this approach. Quality control issues, increased administrative costs, supply chain disruptions, increased logistics costs, and limited negotiating power are just a few of the potential challenges businesses can face when using multiple suppliers. It is essential for businesses to carefully consider the pros and cons of using multiple suppliers and develop a comprehensive strategy to manage these challenges effectively. 


Sticking With One Supplier Can Future Proof Your Cannabis Business 

Future-proofing your brand means taking steps to ensure that your business is resilient and adaptable to changing market conditions, customer needs, and technological advancements. By understanding and addressing the hidden costs associated with using multiple suppliers in the cannabis industry, you can take steps to mitigate these risks and strengthen your cannabis brand’s position in the market. 


Addressing the hidden costs of using multiple suppliers can improve the resilience and competitiveness of your business, which can help you to future-proof your brand and succeed in the dynamic and rapidly changing cannabis industry.


A dedicated, industry-specific distributor can help you leverage the relationships they’ve built with many manufactures to source all the products needed to run a successful cannabis business. This creates a strong option for savvy leaders to streamline their purchasing while saving both time and money. 

Founded in 2014 on the belief that quality cannabis science is at the core of human health and well-being, Emerald Scientific was the first company 100% dedicated to distributing scientific supplies and equipment exclusively to the cannabis and hemp industries. Today we continue to be the most trusted single-source provider of the highest quality chemicals, equipment, PTs, and supplies.

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