I wrote previously about the value of Strengthening Your Three Most Important Vendor Relationships. This post is all about simplifying those vendor relationships to streamline processes, improve visibility and get more leverage.
Heading into the new year is a perfect time to perform a thorough review of your organization’s vendor list and ask yourself “Do we really need ALL of these vendors?”
Over time the sheer number of vendors tends to grow (and grow and grow). This is especially true in companies that don’t have a formal, structured strategic sourcing function. When purchasing is decentralized, it’s much easier for people to do their own thing. This oftentimes results in the build-up of multiple vendors providing similar products and services, with no real rhyme or reason why. More vendors means:
more relationships to manage,
more invoices to review and code,
more checks to cut,
no negotiating leverage, and
minimal visibility into spending details.
Take some time to review your current list of vendors, group them into buckets of common categories (i.e. printing vendors, supply vendors, etc.), and find two categories where consolidating vendors makes sense. Don’t feel like you have to get down to one vendor in each category, because you don’t. But do look for ways to consolidate relationships with fewer vendors to simplify processes, improve negotiating leverage and create new opportunities to build strong relationships with the vendors who remain.
Tom is Founder & CEO of Vendor Centric, a consulting firm that helps organizations adopt a risk-based approach to vendor management. Connect with Tom on LinkedIn or drop him a note at email@example.com.