As I sometimes do, I’m going to comment on a phrase someone used that found my blog. Today’s phrase is “risk of not having preferred vendors list”.
Building Up to Getting a Preferred Vendors List
As companies grow and continue to need to buy more services and goods, they look for ways to keep the costs down. One way they can accomplish this is to negotiate rates for specific services and goods that they use quite often.
Thus, they wouldn’t pay full-price for a pad of paper nor for more licenses of their e-mail software. In fact, with regard to software, they might even negotiate a site license.
Making Those Vendors Preferred
Unfortunately for the company, some employees have specific needs and will not use those negotiated rates and prices but will go somewhere else and spend more money on items than was negotiated with these vendors. Thus, a company will create a preferred vendor system which requires employees to use those specific vendors with whom the company has negotiated prices.
Unfortunately for the employee, sometimes what they need truly is special and not available from the preferred vendors. Thus, some systems allow for special purchases.
Also, there are times when a preferred vendor cannot fill the order. If the item is truly a specialty item that they’ll never be able to fill or if they don’t have enough of an item at a time when the customer desperately needs it and can’t do without it, these are sometimes situations where the employee will be allowed to search outside the preferred vendor.
One thing to note is that, merely because you have a preferred vendor program doesn’t mean a specific vendor truly will provide you with the best value. For example, if you negotiate a low rate for laboratory informatics services with a general-purpose IT vendor and they send you people who have basically just taken a class in some brand of software and have no experience, you’re not necessarily getting a bargain and that can often cost you more than getting someone at a higher rate with more experience.
The Downside of Not Having a Preferred Vendor
If you’re truly buying something in bulk, you probably should consider looking into finding a preferred vendor. Depending on your size, it might mean buying all your pens from a single office supply store.
If your volume isn’t high-enough, you might find you don’t get much attention or especially good deals from some of the companies out there. In fact, even if a vendor allows you in their program, if you’re one of their smallest customers, there are some vendors who won’t give you much attention or service. But then, there are a few out there who won’t take you on if they can’t give you the same great service they give everyone else.
Look for vendors that specialize in companies in your size and, if applicable, your industry. This helps you get the best prices and service for your specific situation.
Or, if employees are spending too much, centralize purchasing in your company and make employees justify why they can’t use the standard items that are being purchased. Make the purchasing department reasonable and efficient. What I mean is this: sometimes, employees will truly need a specialty item. You need a mechanism in-place to fairly quickly determine whether this item is necessary and to purchase it. Otherwise, you could be holding someone back from getting their work done.
For Our Industry
This is tricky because many mid-sized and large customers have preferred vendor systems that cover all their IT needs and, as part of that, they include their laboratory informatics services. This doesn’t work very well because a company that primarily provides web programming doesn’t necessarily have specialized people to select, manage or implement systems like LIMS (Laboratory Information Management System) or ELNs (Electronic Laboratory Notebook). There are cases where companies have a preferred vendor that specializes in these items. However, they do have to specialize in all the brands the customer needs or the customer is still left with a gap for those products the preferred vendor doesn’t cover.
Even the largest laboratory informatics services companies don’t cover ever task needed or every brand of software in our industry. On top of that, they do have times when all their people are in-use.
Even the largest companies with preferred vendors in-place sometimes end up having to come out to use the services of small companies like mine. This requires having rules that allow for this when the preferred vendor list doesn’t provide the right resource. Without that type of rule, a customer obviously couldn’t do that.
But for an example, a large pharmaceutical fairly recently called me to bring me onto a project where their software vendor could not supply as many of the level of resources they needed. So, where they needed a certain number of experienced people and a certain number of junior people, the vendor was short on the number of experienced people and offered more junior people. The customer didn’t want to change their plan and called me. We all had a productive project together and the customer probably was able to better keep to their timeline. I should add that the customer was experienced with projects, timelines and resourcing, so they were less likely to vary from their plan than one with less experience who would be more easily pushed into taking something they didn’t really want or believe in.