I hope that you have enjoyed the article “The Vendor Performance Myth.”
One area that I didn’t have enough space to elaborate on in the article is the topic of the vendor’s core competency. In all of my years in purchasing and supply management, I have seen so many problems arise because of buying a category from a vendor where that category is not the vendor’s core competency.
I know that when you have a good vendor, you want to funnel as much business as possible with that vendor. But just because a vendor is good in one category does not guarantee that vendor’s success with other categories.
That’s so important, let me say it again: just because a vendor is good in one category does not guarantee that vendor’s success with other categories.
They may be an “A” vendor in Category 1 but a “C” player in Category 2. Your organization deserves better than C players.
“Reduce the number of vendors.” “Leverage our spend.” “Partner with suppliers.” These are all mantras that you may hear driven down from top management.
And they are all good initiatives when they are applied correctly. Your job is to make sure that they are not applied incorrectly. As a purchasing and supply management specialist, your job is to educate others in your organization about the little nuances. Awarding non-core business to a vendor is such a nuance.
Now, having said that, I believe in vendor development – working with vendors to develop new capabilities. However, vendor development needs to be applied appropriately.
If there is a supply base with several highly capable and competitive vendors, then I do not feel that you will get much return on your investment in developing a vendor in that marketplace. Only in those situations where there aren’t many capable vendors or you need strategic categories custom manufactured does vendor development give you the most bang for your buck.
When I have more time, I hope to post some “war stories” about how trying to consolidate spend with non-core vendors taught me a lot.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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