I have to admit that I didn’t make some friends yesterday regarding the subject of Vendor management, but it really got me thinking about how those relationships need to be managed and whether I need to adjust my approach in the current climate.  After additional considerations, I would say “No”.  My view on this topic is pretty simple, that Vendor relationships need to be collaborative, there needs to be a mutual respect, and there has to be consistency in the approach. After all, this is a business relationship, and while there might be connections on a personal level, it still comes down to appropriate and consistent execution for the business.  I also take the approach that my team should oversee the management of these relationships and I’ll support them in developing their vendor relationships and step in only when necessary.

     One of the situations that happen to table itself happened to be with a 3rd party reseller of software who we contacted to have some modifications done to our MAS-200 system. Pretty simple modifications in the AP module. Something I would normally not get involved with. I had been involved in the preliminary quotes, all seemed well, and I told the group to go ahead with the project. That was, until the the email came back asking me which terms we should be moving forward with. First of all, we usually have pretty standard terms set up within the system for each vendor, so why would this be changing now?  The vendor came back with an “Option 1 of moving to the front of the scheduling queue for a 100% prepayment” or an “Option 2 of 2-weeks out for a 50% prepayment”? What? First of all, what if I was a pending customer ready to have a job done and another customer was able to leap frog over due to a higher prepayment? Second, at $175/hour, there is an abundance of MAS programmers out there at a much lower level to tolerate being pushed out.  Third, are you fully booked right now or not? You can either start the job in the next day or two or your not available till mid-month. Which is it? Option for them; we’ll take the 50% prepayment and you can start immediately, or we’ll look for a new vendor.

     The second situation involved one of our screenprinting vendors who received our letter that we were going to start enforcing terms of 2/10, Net 30 for all our payables. Fortunately, we happen to be in a position that we can take advantage of early pay discounts. The vendor in question came back saying that they could not afford to give up a 2% discount on their product and it wasn’t worth it to get the cash in the door early. Really? They also told me that they had become the “sole printing vendor” for the company and had already given up a 4-5% discount on their previous prices. Great, but that would be tied specifically to volume and the good fortune to be positioned as a primary vendor? Turns out from our buyer, this was also not true.  Atleast we know where we stand with this vendor and can plan future purchase accordingly.

     I’m extremely loyal to my vendors and those that my team determines we need to establish relationships with. That support is long-term and when there’s hiccups we will always work through them, but the support will continue. However, that support is quickly pulled when I determine that the support is not 2-way and we are not engaged in collaborative relationship. There’s too many quality vendors out there to tolerate those that are merely transaction based and don’t look at the long-term benefits of vendor/customer relations. How do you manage your vendor relationships?

Thanks for reading. . . .

Jeffrey Ishmael