In my time as a consultant, I have seen many vendor relationships that are not optimal and a few that are outright hostile. Although I believe most companies understand the benefit of building strong partnerships with suppliers, there is often a misalignment between the theory and the practice.
Many organisations are still creating a disappointment loop where procurement is instructed to reduce costs, vendors over-promise, and their teams under-deliver. Often this becomes even more fraught in after-sales service.
We continue to “hold it close to our chests” rather than working together in an open way that allows everyone to have the level of information needed to provide the best outcome.
This apprehension to be transparent reinforces the distance between “us” and “them” that erodes collaboration and results in a lack of innovation at best and, at worst, substandard products and service for our customers.
To overcome these issues we need to break the disappointment loop by treating vendors as active participants with greater collaboration, transparency, and understanding. A model where we prioritise value over cost and work towards a shared long-term vision.
Most change requires technology to enable and support it and, therefore, IT vendor relationships are particularly important. As we see more and more companies transform to take advantage of Agile (and other) ways of working, the need for optimal vendor relationships is no longer a nice to have – it is fundamental to ensuring agility and longevity in the 21st-century market.
“Delivering always-on technology to meet the demands of 21st century businesses takes a village.”
Ways of working methodologies, such as Agile, are mindset shifts from the status quo. The ability to think differently is far more important than following a step-by-step framework. As a result, when faced with challenges or tasks outside of the set framework, people revert to what they know.
Without that mindset shift, even in established Agile environments, the reflex is still to prioritise cost over value. We all know that if we pay peanuts, we get monkeys, but we can’t help ourselves – the thinking to get the best short-term price is still so ingrained.
Vendors that believe they are valued and respected work harder for you. Treating vendors as part of the team with open and honest communication and a shared understanding of strategic goals results in their products and services being developed to meet those goals.
Money saved during initial implementation to get “the best deal” is often paid out double in unplanned and unbudgeted costs. Lost opportunities from poor performance or substandard products and services are also increased when seeking “the best deal”.
With greater innovation and continuous improvement, there is less need to “upgrade”. Seeing the relationship over the product helps to stop the depreciation cycle mentality. Changing systems is also disruptive to staff and customers whereas continuous change is easier to manage.
The more you view a relationship as being transactional, the less likely you are to see a respective role in resolving issues. The chance is also higher that tempers will flare and time will be wasted in the “blame game” rather than seeing an opportunity to make improvements to products, services, or the relationship.
The more you know about your vendor and the more they know about you, the greater your chance to utilise your vendor’s expertise in other areas. You may be looking to improve your data management and the vendor that supplies you web-development software has recently acquired a highly innovative startup specialising in customer insights and analytics that is yet to test the New Zealand market. A win-win situation!
One of the best ways to ensure your vendor relationship is optimal is to choose the right vendor in the first place.
Use the right selection process for your project/enterprise to ensure all benefits are unlocked. If you are an Agile company or implementing an Agile project, then don’t use a Waterfall RFP process.
Ensuring you have shared values serves as a shortcut to understanding and makes for more beneficial partnership. Keith Shering explored the value of sharing your purpose here.
The best product or service is one that works best for what you are trying to achieve, within the market that you operate, and with a vendor you can build a partnership with. Don’t leave this decision up to what is in the “top quadrant”.
Break the disappointment loop by prioritising value over short term cost. Embed this across the organisation from the CFO to the project and procurement manager.
Despite what Disney would have us believe, a marriage does not end with a wedding. Similarly, vendor management does not end with a contract. As with all relationships, ongoing commitment is required.
It’s a two-way street so ask your vendor what you can do to help them provide the best outcomes and implement them.
Be transparent and open about your strategic objectives and require the same from your vendor. Include your vendor in strategy discussions and presentations.
Make your vendor part of the team, instead of just a recipient of requirements. Discuss the issue and work collaboratively to solve it.
Regularly assess the relationship and work together to make improvements.
Break the disappointment loop by unlocking the full potential of your ways of working by ensuring they extend to your vendor relationships. See your vendors as partners and work together transparently to enable innovation, agility and growth in your company so you can best serve your customer’s needs.
You might not be getting the full value from your vendor relationship but someone is – and it could be your competitor.
Su Beresford is a Business Analyst, storyteller, and facilitator with a focus on design and customer experience, who enables organisations to understand themselves and work collaboratively towards a shared solution. She embraces innovation and new ways of working to augment her craft with a passion for obtaining and the sharing knowledge.
You can find Su at [email protected]