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Treat your suppliers like kings - and reap the benefits

Supplier: MultipliCD (old)
14 March, 2007

When Mark Balla, Managing Director of MultipliCD Duplication Services, recently organised a dinner for his staff, he invited a few of his best suppliers along. It seemed like a natural thing to do. "They're part of the team and the staff know them well," Mark says.

At the dinner, one supplier said that none of his other customers had ever invited him to a staff function. For Mark, it's a sad reflection of how business is often conducted. "A lot of companies treat suppliers like second-class citizens," says Mark, who believes his relationship with suppliers is a big part of MultipliCD's success.

Casting around for a change in career (he had been working in exhibition and advertising sales) seven years ago, Mark realised that demand for CD and DVD duplication was picking up overseas, but few companies were offering this service in Australia.

He started with a single CD duplication tower in his home. As business grew, he moved into a bungalow on his Melbourne property and, later, into premises in Toorak. Today the company has seven employees and an annual turnover of $3.3 million.

A turning point in MultipliCD's growth came four years ago when a supplier made an unexpected offer. Up to that point, the company had offered mainly duplication, a slow process that limited it to jobs of about 500 units. To help MultipliCD move further into the high-volume market, the supplier could replicate discs quickly, by the thousands.

"When you take risks, you have to accept there may be consequences. The key is to ensure the consequences don't ruin the company."

During a meeting with executives from a Taiwanese replication house, Mark was asked what was holding his business back. His answer: a lack of money for advertising. The Taiwanese executives made an offer: a US$50,000 credit against future orders, which Mark could spend on advertising over six months, no strings attached.

"It was a big moment in our business. We're now up to six million units a year, and of course a lot of the replication orders go to that supplier."

Mark goes out of his way to maintain strong personal relationships with suppliers and it's paid off in countless ways: extra effort to meet a deadline, prices that would normally only be offered to larger customers, help when MultipliCD is in a jam.

He recently received a call from a client who had taken delivery of 500 discs. It turned out that MultipliCD had used the wrong data. Mark called a local replication house and asked if they could redo the order in a hurry.

"The supplier got the discs to us in 14 hours," he says. "Normally it would have taken four to five days. It wouldn't have happened if we hadn't established a good relationship."

His attitude towards suppliers goes beyond talk. If one has helped with a particularly lucrative job, MultipliCD will pass on some profits. Mark admits the amounts may be relatively small - $1000 or $2,000 - but the gesture is always appreciated.

Another important ingredient of MultipliCD's growth has been willingness to take risks. Even with the support of the Taiwanese supplier, Mark had to commit time and resources to crack the high-volume market, not to mention extending hundreds of thousands of dollars in credit to new customers. It's paid off with orders from News Limited and Fairfax, which regularly give away CDs and DVDs with their publications.

"When you take risks, you have to accept there may be consequences," Mark explains. "The key is to ensure the consequences don't ruin the company. The alternative - taking no risks, avoiding mistakes at all costs - is a formula for slow death. A business that doesn't make any mistakes is a business that isn't doing anything."