Why you should re-evaluate relationships with commercial vendors regularly

We understand how convenient and easy it can be to work with a seller you have a long-term relationship with. Many companies avoid re-evaluating old associations for this and a variety of other reasons.

However, we see significant advantages in taking a closer look at these arrangements versus staying in your comfort zone. You need to ensure that your business continues to receive the same level of quality and value as it did at the beginning of your relationship.

The better you know the sellers – and most importantly, the more they know you – the more you will benefit from excellent services, special prices and better terms.

Reasons for reassessing the seller relationship include:

  • The supplier does not provide industry-specific solutions for your business.
  • The seller does not offer the latest available solutions.
  • The seller had a change of staff.
  • These are all good reasons to know what other options are available for your business.

Vendor Management: Best Practices

Before you choose any partner, research the health of their business and whether they have a negative reputation among the companies and individuals they have dealt with. Are they growing or losing employees (this can give a clear indication of how your partnership is going), and are they providing services that will really benefit your organization?

You should also have a clear understanding of what both parties expect from each other. Find out who you will be working with and what each team member’s role is. Understand how much “lift” you need to do. If you end up doing more work than you pay for – for example, if you’re providing services and solutions to the table that you want the seller to do next – then you definitely need to reevaluate the agreement.

Continuously monitor and track performance. Put key performance indicators (KPIs) in place and use tools, such as a scorecard, to make sure you stay aware of how vendors (or don’t) meet your standards and deliver value to you.

Re-evaluate annually. Businesses evolve, change and grow, and they won’t always need the vendors you have today – and they won’t always be able to meet your needs. We understand that employers often stick with the supplier because it’s convenient and they’ve been with them “forever,” but we’ve found that using this approach is generally detrimental to the organization.

Case Study: Benefits Broker

We were referred to a mid-sized company in North Bay by a 3rd party HR consultant. The business owner has been with the benefits broker for 20 years and has been comfortable with them. Initially, we conducted a compliance audit of their benefits program and found several areas where the business was out of compliance.

From there, we analyzed their systems and processes to see which ones were outdated and ineffective. Based on our findings, we were able to show that the relationship no longer serves the needs of the employer. Taking such a deep dive into their practices saved the client time, money, and ultimately efficiency.

Payroll

Companies can outperform payroll vendors or choose a payroll vendor that is too large to provide adequate service and support for what is needed. Payroll is often a hot item when we bring it up to employers, yet many don’t want to take on the task of looking for a new vendor because they think it will take a lot of time and effort.

However, by not evaluating what works and what is still needed, the company can run the risk of facing even greater problems, especially when compliance penalties emerge unexpectedly.

When there is a break with a company and its supplier, the relationship should be a priority, either by trying to fix what isn’t working or by taking a step that will protect the company’s best interests. It makes things a lot easier on the job in the long run.

technology

Having a partner who understands the need for the latest technology is key. If there’s one thing the pandemic has reminded us of, it’s that change – sometimes very rapid change – is necessary. Whether or not you need computers, IT support, or a special machine to create a widget, you want to work with someone who understands your business and has the right technology to back it up.

The question you should ask when reevaluating any supplier relationship is: Is there something I am not doing and should be doing for more efficiency?

A successful relationship includes great communications, and vendor partnerships are no different. We’ve seen that convenience keeps many companies in dangerous territory, but if they can understand the need to move forward, and look for market service providers that specialize in their industry, they are often shocked to find out the services and support they weren’t getting before. It doesn’t hurt to just look.

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