Well, I kicked of the supplier size case study series with a post about a negative experience with a large supplier, Dell. This morning, I’ll continue the series with a horror story about another large supplier: Yahoo Web Hosting.

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For those of you “tuning in” for the first time, this series is designed to share real-life experiences related to hypotheses that I am testing regarding how supplier size needs to be factored into sourcing and supplier management approaches.

So here goes the Yahoo Web Hosting case study.

Back in 2002, the tech markets were crashing. Dot-coms were going out of business left and right. And Web hosting vendors were no exception.

At the time, Next Level Purchasing had been using a Web hosting vendor called Hypermart. They really had a great service.

But when financial times got tough, they sold out to Endurance International – a holding company that was gobbling up Web hosting providers. And, after this acquisition, things got bad. They offshored all of their customer facing functions and the new people couldn’t get anything right. It was an unqualified disaster.

So in those times, the #1 priority for supplier selection in the Web hosting category was financial stability. Because they were a publicly-held and profitable company, we selected Yahoo for our Web hosting to replace Hypermart.

All in all, we were very happy with our relationship with Yahoo Web Hosting for the next few years. The only problem we had was related to our site’s capability of sending email via the various forms we used on our site – you know, when you fill out one of those “Contact Us” forms and hit “submit” and it sends an email to the company?

Well, every six months or so, that capability – referred to as “sendmail” functionality – would malfunction. When we reported it to Yahoo’s tech support, it was usually fixed within 24 hours.

Now that problem was a pain. We depend a lot on the sendmail functionality for things like sending automatically-generated usernames and passwords, getting questions from our students, and even receiving notifications that a new student has enrolled and must be set up in our system.

But one 24-hour outage every six months was tolerable given that we knew the supplier wasn’t going to go belly up without notice.

However, in March of this year, things got really bad.

The sendmail functionality went down five times in a six-week period. The outages were lasting several days. Sure, we had a backup plan, but backup plans are backup plans because they are not as good as primary plans.

But not only was Yahoo Web Hosting’s quality a mess, but their service was even worse. I called tech support and the people who answered the phones didn’t have responsibility for these types of issues.

And, not only that, but they wouldn’t forward us to the people who had responsibility, nor would they personally speak with someone that had responsibility. Their process was simply to enter the problem in their system and wash their hands of the matter.

Escalations to supervisors produced the same response: “we can’t do anything other than enter it into our system and let Engineering handle it.” And the estimated resolution time was 3-5 business days. No chance for expediting. No chance to speak with anyone who could control the outcome. No empathy for the customer.

I explained to them that the problem had caused us to lose about $22,000 in revenue from the previous month. They didn’t care. The process was the process. There was no personal responsibility. No ownership of the problem. Not the slightest recognition of the pain of the customer. No above-and-beyond mentality from Yahoo Web Hosting whatsoever.

I even went as far as trying to record our telephone conversations for this case study but, as soon as I told them I was recording the call (notification is required by law), they would hang up. Funny how they can require that the call would be recorded, but weren’t willing to be held accountable themselves.

Anyway, when a supplier doesn’t care that you lose $22,000 in revenue, it’s obviously time to switch suppliers. So that’s what we did.

After five years of reliable business, Yahoo Web Hosting turned its back on us when we needed them the most. So we tossed them to the scrap heap of former suppliers.

Hmmm…so far that’s two case studies of two large suppliers. Does that mean that small and mid-sized companies should avoid large suppliers? Does that mean that small suppliers are best?

Be patient. There is still a lot to explore in the coming case studies and many lessons to draw from these experiments!

To Your Career,
Charles Dominick, SPSM
President and Chief Procurement Officer
Next Level Purchasing, Inc.
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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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