Make vendor relations strategic, not transactional.

If you’re like many, it’s a daily struggle to stay on top of purchasing tasks like reconciling purchase orders and dealing with product issues. And, how do you know if you’re getting the best prices on your orders? If you have a procurement manager, have they negotiated the best deals with suppliers and provided the necessary oversight for real bottom-line savings?

If the answer is “No.” or “I’m not sure,” please read on.

What is a TRANSACTIONAL vendor relationship?

For many districts, purchasing goods and services is not a primary purpose but a means to an end. It’s one of many tasks vying for attention. A problem needs to be solved right away to allow delivery on the primary objective. This drives a very transactional relationship with vendors. “I have a need; you have what I want; here’s our money; next!”

While seemingly efficient, the problem this transaction creates is that staff, whose primary job is not to source and work with vendors, are constantly in that “get it done” loop. They’re not looking for strategic solutions, but the fastest, easiest solution. This prevents the organization from driving additional value out of the vendor relationship. Transactional relationships will solve your immediate problem, but they don’t set up the organization for long-term success.

Best Practice:  Create STRATEGIC vendor partnerships.

While they may require an initial investment of time and vetting, strategic partnerships are worth it. Especially when your goal is to do bigger, better, more; to create sustainability and guaranteed cost-savings. Vendors are subject-matter experts. Use them to train and transform your organization. Let them help you solve your procurement challenges in a way that doesn’t cause other problems; doesn’t box you in if there’s some growth or other opportunity to execute that might be more economical. And, count on getting the lowest cost of ownership for your requirement.

Supply chains are tight; lead times are long. How great would it be to get a vendor call like, “Hey, we just got some hand sanitizer in. Do you need some?” Or “We just got some Chromebooks in. Can you use any right now? They’re on sale!” These are just a few examples of the advantages organizations have with strategic vendor partnerships.

How to create strategic vendor partnerships:

  1. Do your homework. Conduct a purchasing analysis to determine which products and services you use most frequently; and which are consistently the highest-ticket items. These are the purchases to be most strategic with.
  1. Compare vendors. After the analysis, contact different vendors to see who can give you the most bang for your buck. Can they offer discounts? Can they provide employee training? Can they prioritize shipping or service time?
  1. Communicate the results. Create a presentation and train all stakeholders in your organization who participate in spend. Everyone must use the same system for the best bottom-line savings.

Finally, there are some situations where transactional relationships are okay.  But, for the most part, it’s ideal to stop the procurement struggle and have more control over your purchasing by forging those strategic vendor partnerships.

About the Author: Charles Wright

My aim is to raise the procure-to-pay IQ of clients as we help them deliver bottom-line results. I also enjoy science fiction – if it has to do with space or superheroes, I’m there! I’m also a die-hard Tennessee Titans fan when not adventuring with my family or serving at church.
By Published On: March 16th, 2022Categories: Best Practice Series, Efficiency, K-122.7 min read

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