Vendor Complacency

Vendor relationships play a crucial role in the success of any organization. They can provide goods and services necessary for businesses to operate efficiently and effectively. But as with any partnership, complacency can be a silent but dangerous threat. In my experience, vendor complacency can manifest in two distinct ways. Firstly, businesses can become overly reliant on their vendors, often leading to a deterioration in service quality, increased costs, and potential disruptions in operations. Secondly, your organization can outgrow the services and standards offered by your vendor.

One of the primary reasons businesses fall into the trap of vendor complacency is comfort of familiarity. Over time, as a business and vendor relationship matures, a sense of trust and reliance develops. This trust can breed complacency, where businesses assume that their vendors will always deliver as expected without actively monitoring or assessing their performance.

The Pitfalls of Vendor Complacency:

Stagnation of Innovation: This occurs when a businesses become complacent with their vendors to the point where they miss out on opportunities to explore new technologies, products, or services that could enhance their operations. This stagnation and hinder competitiveness and product offerings.

Quality Decline: Vendors who no longer challenge themselves to meet high standards may become lax in their service or product quality. Over time, this can lead to a decline in the quality of services received. Vendors should be keeping pace with advances within their respective fields.

Rising Costs: Vendor complacency can lead to cost increases. As vendors sense a lack of competition or urgency from their clients, they may gradually raise prices without providing additional value.

Weakened Negotiating Power: Becoming to complacent with your vendors may cause you lose negotiating power when it comes to contract renewals or renegotiations. Vendors are more likely to be accommodating and competitive when they sense that a business is actively exploring alternatives.

How to Address Vendor Complacency:

Regularly Assess Vendor Performance: On an annual basis, monitor and evaluate your vendors. Along with traditional and required auditing metrics like financial stability, third party audit findings, and IT security, you should be looking at product development, outages, SLA's, and other key performance indicators (KPIs). Do not be afraid to confront your AE's (especially if its a contractual obligation).

Stay Informed About Industry Trends: Keep yourself updated on industry trends and innovations. This information will help you identify opportunities for improvement and ensure that your company is keeping pace with the industry. If the industry is evolving and your vendor is not, it may be time to evaluate your partnership.

Maintain Open Communication: Foster open and transparent communication with your vendors. Discuss your expectations, goals, and potential areas for improvement. If a vendor is not meeting your standards or the standards set forth in your agreement, let them know. But be ready for the realization that your vendor may not have the capability to meet your needs.

Continuously Negotiate and Renegotiate: Don't wait until contract renewal to negotiate with your vendors. Continuously seek ways to improve terms, prices, and services.

Conclusion

A vendor can provide a service, product, or expertise that your company cannot. Oftentimes, vendors find a specific customer niche that works for them. That niche can be specific asset size, employee count, or customer base. However, your company will grows and customer demands will change. Consumers can be fickle. They will leave for a superior product or service. Don't let vendor complacency cause hinder your ability to provide best of breed solutions to your customers. Remember, the customer doesn't see the vendor or their inadequate product. They see you.