Suppliers Are Customers and Buyers Are Vendors

Gerhard Crous via Unsplash

Buyers are prone to a naïve conception of suppliers as vassals, bonded and dependent on them for life-sustaining business.

If you think that way, it’s easy to give the suppliers short windows in which to respond to RFPs, or to give suppliers little information about why you’re purchasing or what your key problems are.

It’s just part of the game to make the suppliers work like dogs on a proposal and to then nickel-and-dime them when it comes to finalizing the contract. By this logic, everything is a commodity. Nobody adds value.

These immature purchasing agents rationalize this behavior by saying it is the suppliers who are the ones who want our business. Might as well make them work for it. Right?

Of course, this creates what an economist calls an adverse selection problem, at least in the limit.

Buyers who treat their suppliers as vassals will end up with vassals as suppliers.

The good ones, the vendors who want to solve your problem as partners, won’t waste their valuable time.

One of the corollary lessons of Covid is that buyers are competing for the right supplier relationships.

When channels got tight, when things got weird, suppliers favored those with whom they had strong relationships. Nobody likes being treated like an indentured servant.

The deepest lesson from the Pandemic has been that enterprise procurement isn’t (and hasn’t ever been) about cost minimization. It is risk management. Done properly, it is about creating opportunities for upside and minimizing the exposure to downside. The world is an uncertain place.

Good buyers know that they have to go out there and woo the right suppliers to engage with them, so that they can see the full gamut of solutions to their problems and generate a real sense for value.

Procurement isn’t about running an RFP process any more than hockey is about knowing how to take a slap shot. Procurement is driven by obtaining value-for-money, just as hockey is driven by putting the puck in the net.

The RFP is just a means to an end.

But somewhere along the line people forgot this. They became more interested in the process than the outcome, the bureaucracy more than the objective.

If you want to find suppliers, there’s an easy place to look.

But, if you want to engage the best suppliers, you are going to have to collaborate with them.

EdgeworthBox is a platform for strategic sourcing. We provide a layer that complements existing procurement infrastructure, so that buyers can execute an RFP cycle that leads to more supplier proposals, when an RFP is appropriate and also develop relationships with suppliers that are suited to a broader context. All without changing the infrastructure they have invested so much in building to date. Give us a shout. Or take us for a free spin.