Margin does not come from the supplier. It comes from volume.

The usual question is: how do I get the supplier down to a lower price?

That question has a small answer. A few percent, after a few meetings, and usually only once.

The larger question sits elsewhere: how do I reach a position where the supplier offers a better price on their own?

The answer is volume. And volume does not come from the supply chain. It comes from the ecosystem.

The ecosystem first, the chain second

To find the right supply chain, the first principle is to understand the ecosystem of that industry.

And understanding an ecosystem means one specific task: identifying the stakeholders. You have to be able to work out which people, which groups and which organisations are actually involved in what we call "supply".

That list is almost always longer than it first appears.

Sometimes the answer is upstream

To find the right supplier, you sometimes have to go one layer up and study the upstream industry: whether the players there are in need of attention and capital.

And sometimes the upstream industry points you to the right supplier itself. That is the best case, because the introduction comes from somewhere whose interest is tied to quality rather than to a sale.

The work that follows the map

Once the ecosystem is mapped, the most important work is connection.

Reaching the actors who appear to sit outside the chain but are active inside the ecosystem repeatedly opens routes that cannot be seen from inside the chain.

This is something I kept in view throughout my time as head of trade development, and its return was greater than any price negotiation.

One example of an ecosystem scope

Take pharmaceuticals — not to explain the ecosystem, but only to show where a scope sits and how it can be used in the supply chain.

The rough scope is this:

raw material supply → manufacturer → distributor → pharmacy → physician → end user

And the end user has two parts: the patient, and the person caring for them.

That second part is where almost nobody looks.

The point that is uncontested

On a project to increase sales of an over-the-counter product, instead of working every link above, we directed the information effort toward the person caring for the patient.

The reason was simple: it was uncontested there.

Someone caring for a patient searches on behalf of the person they are worried about. A worried person looks for information more than the patient does, and reads more of it. Across all those crowded links, this one had almost no competition.

One thing separates this from a trick: a focus like this only works when what you offer is genuinely useful to the person searching. Useless information is useless in an uncontested space too.

The chain that produces margin

And here is how it connects back to price:

orders rise → production increases → purchase volume from the supplier grows → and at that volume, a better margin comes back from the supplier.

None of this happened through negotiating on price. It happened by moving position.

In short

Margin is not the result of negotiation. It is the result of position.

And position comes from knowing the ecosystem: who genuinely has a stake in this industry, which of them are not yet being served, and which point is still uncontested.

The supplier is the last link you should go to, not the first.