I’m sure as you read the title of this blog followed by my designation, you’re probably thinking, this is another article from a sales guy who wants me to buy his product/services. While I certainly want to promote my company, the genuine intent of this article is to share my advice with all key stakeholders in the Insights space on the benefits of partnering with one strategic vendor/supplier versus multiple.
Over the years, I have helped clients become more profitable but one very basic and common challenge I’ve witnessed on a regular basis is that most of them were working with too many vendors. As a result, it was causing various problems such as: lack of standardization, optimization, slower innovation, etc. This unfortunately, can lead to limited profitable growth.
Let me further explain my point of view on a single supplier strategy with a simple example. Working with too many suppliers is similar to managing multiple TV subscriptions (Netflix, DirectTV, OnDemand/DVR, Amazon, etc.). Your options are limitless and each one comes with a unique set of channels. A simple subscriber like me who has limited time to consume TV is now confused and actually spending more time choosing than actually watching. Opting into too many subscription packages causes an increased administrative effort and possible loss of spend if it isn’t fully utilized. Similarly, I see many clients spending more time with their suppliers instead of focusing on their core competency or worse, less time investing in their clients and their needs.
While it is practically impossible to have one supplier that can address all of your needs, you can certainly reduce the number of suppliers down to a necessary few. Consolidation, when done the right way, automatically leads to conversion of suppliers to partners. If you and your partner are both invested in the success of your business, you will grow together, and see the following results:
- Improved innovation and design collaboration
- Improved plan synchronization and information exchange
- Improved supplier responsiveness
- Decreased effort to track supplier performance and manage relationships
- Improved bargaining power to reduce costs
- A mutually beneficial set-up which allows for faster execution of initiatives
- Governance at executive levels, which influences the importance of partnership on both sides
It’s often that you won’t know the better route until you experience it. Think about it and try to give it a shot. If you’ve switched to using Uber or Lyft for all your transportation needs, it’s hard to go back to dealing with a regular taxi driver (you can’t see how close they are to you on your mobile phone).
The focus should be building strategic partnership(s) rather than building an arsenal of mere suppliers. You want a partner that takes a genuine interest in your business and helps you to focus more on your core competency and helps drive profit.
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