Vendor Performance in the Economic Recovery: 5 Lessons

Betty tried to place an order with her long-standing vendor, but got bad news:  the vendor could not deliver within her timeline.  She had a firm commitment to her customers, so she had to scramble to find another supplier.  (Let's pause to praise that first vendor for honesty.  Too many companies would take the order and then deliver late.  By refusing to accept a commitment he cannot honor, he has raised his credibility as someone who will honor the commitments he does make.)

So Betty (not her real name, but definitely a real person) got on the phone and got -- sticker shock!  Her preferred vendor had been giving her a very good deal, probably out of loyalty for long-term business, and also because the vendor was trying to stay busy in a tough market.  Unless Betty gets lucky, she'll either break her budget or use a less desirable component.  Ouch.

Here are the lessons from Betty's experience:

1. Know if you are getting a good deal from your current vendors.  Do a little shopping around, even if you are very loyal.
2. If you are getting a good deal, reserve time on the vendor's production schedule as early as you possibly can, to ensure that you are able to continue using him.
3. Bid your jobs using cost estimates at the market price, not at the good deal you are getting.  If you need to go to another vendor, you'll want money in the budget to pay his higher price.
4. If you are getting a good deal, be very, very good to that vendor.  Pay very promptly.  Express your appreciation for his product or service.  Spend some time getting to know him.
5. Be very careful about being locked into one vendor.  I like to throw all of my printing business to one guy, so that he treats us as a good, loyal customer.  But I know that there are a dozen good alternatives in my city.  If I only knew of one printer, I'd work hard to get to know another one.

As the economic recovery continues, getting good performance from your vendors will become an increasing challenge.  Get started right now.

Comments

[Umesh Mishra]

Definitely sounds pro-active, but easier said than done.

How can Betty expect to place a purchase request when she herself is nesting on finished good inventory.

Once betty has managed to de-stock her inventory, i am sure she would wait for clear signals of revival from the market.

And for that, client enquries will boost her morale up, than analyst reports.