It’s fair to say that most businesses can only operate and fulfill their value proposition by relying on a wide range of vendors. As you would expect, some of those vendors will be more critical to the company’s success than others.
Nobody wants to turn up at work one morning to find that operations have been turned upside down because a critical vendor hasn’t been able to deliver. The ability to predict that something bad could happen before it does happen is so much better than finding out after it has happened.
While ‘something bad’ represents a range of possibilities from inconceivable to a dead certainty, there are some things you can focus on that might provide some insight into your vendors’ viability.
- Bankruptcy. A business that is not earning enough to pay its bills is bound to go bankrupt. You should be performing a business credit check to verify your vendors are financially healthy.
- Legal action. Individuals, organizations, and government bodies may initiate legal action against a company for many reasons, including fraud, corruption, malpractice, and illegal activities. The number of damages levied against the vendor could be significant enough to threaten its viability.
- Local or global credit crunch. In difficult economic times, a vendor may defer strategic investments and make cutbacks as a survival mechanism. These actions can leave it potentially uncompetitive.
- Exceptional growth. Rapid expansion can lead to declining service performance if the vendor is unable to recruit and train new staff quickly. Additionally, changes to the supplier’s priorities, service, or support may create an inability to meet your needs.
- Low market share. A supplier might treat its own vendors and customers poorly, refusing to acknowledge any wrongdoing or poor practices. This can result in its own vendors declining to do business with them. This will affect its ability to service its customers (or at least those who are still willing to work with them).
- Takeover or merger. If two companies are combined, one inevitable outcome is streamlining both the products and services offered and the workforce needed to build and support them. This can affect the choice, price, and quality of products and services offered by the combined entity.
- Technology failure. Any inability or unwillingness on the vendor’s part to adequately and proactively protect and defend its technology can result in a loss of its competitive advantage over time.
- Performance failure. The vendor’s persistent inability to meet agreed service delivery targets due to its own actions or inactions could be considered too much risk to bear. If it persists, contract termination may be the organization’s only option.
Forming a solid relationship with the critical vendors should be a priority. It does not mean, however, that you should not consider their viability to provide value to your company now, and into the future.
About Limitless Technology
Limitless Technology, LLC has been managing complex indirect spend and vendor documentation since 2006 for some of the largest companies in the USA saving them millions in costs.
Through our Billing Optimization and Vendor Management Solutions proprietary platforms, we utilize technology, processes, expertise, time, and resources to improve our client’s bottom-line.
Limitless Technology manages your vendors, so you can manage and grow your business.
For Additional Information Contact us at:Phone: 407.330.4466