Building a strong collaborative relationship with your vendors can deliver a lot more than cost savings.
In my experience, every organization has vendors that it depends on.
The best relationships can provide:
- Critical supply chain information on availability and other market issues
- Insight about new or alternative products and services
- Product design and service enhancements
- Competitive intelligence
- Co-marketing and branding
- Joint venture opportunities
Vendors that are providing resources that go beyond price concessions will provide your organization with a decided competitive advantage.
If they don’t, the reverse is also true.
If you want to enhance your bottom line, I believe that it starts with a hard evaluation of your vendor pool.
It shouldn’t be necessary to look at every vendor to improve your position. It is likely that the 80/20 rule will apply but it may not in every spend category. You could group similar vendors to manage non-critical spend categories.
The hard choices will center on vendors that have been with you for a long time but may not be delivering the quality products or services they once did. We all appreciate loyalty and they may just need a jolt to get back on track.
Consolidation can have many benefits. Vendors that can get a larger share of your business will typically be motivated to deliver more benefits. A smaller vendor pool can yield nice gains in administrative and support efficiencies.
Several weeks ago, I provided some ideas on supplier management and vendor onboarding. If your system allows vendors to perform most of the onboarding steps, the evaluation process for new vendors will take a lot less time.
Your evaluation will be much easier If you can automatically collect information on products and services provided, delivery terms, geographic service areas, references, insurance and financial statements.
I would suggest that you have an open discussion with new vendors so they understand your collaboration goals. This should lead to a more rewarding relationship.
If you don’t think you have enough time to do this then consider that a lot of people take vacation in August and some that don’t take a mental vacation.
This is an important task will help your staff stay focused and productive so why not get started?
If you want to explore a purchasing or procurement topic in greater detail, I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that my recommendations will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.
Organizations of all sizes are reducing costs and increasing efficiency, without changing the way they conduct business. If you would like to know how, simply give me a call or send me an email with your contact information and the best time to reach you.
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Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life