Parting may be sweet sorrow, in interpersonal relationships, according to the Bard, but in business it can be what saves your company. Vendor management best practices place a great deal of focus on how to manage and optimize the existing relationships your supply chain depends on, but they may fall short on guidance when it comes to enough is enough and it is time to break things off with an underperforming vendor.
Severing business relationships is never easy, but much like a dead tree branch must occasionally be pruned to ensure the tree stays healthy, knowing when to call it quits with troublesome vendors is a skill worth cultivating.
1. Can You Afford to Have a Poor Vendor?
You depend on your vendors to provide the components and services that facilitate the quality and customer services that represents your brand.
If carelessness or corner-cutting on their part leaves you with problems that mean returns, recalls or repairs, it's time to consider how much your relationship with that vendor is really costing you and impacting how your customers view your brand. Often a vendor will "makes good" on their mistake with a credit, but the impact of your lost time and negative brand perception may not be so easily fixed. If several mistakes like this have dotted your working relationship and your vendor doesn't seem eager to change their processes to prevent another, it's probably time to move on.2. Is Your Vendor Impacting Your Efficiency?
When you put vendor management best practices into play, you rightly assume that a vendor will hold up their end of the bargain—delivering goods on the stated timetable, communicating transparently about delays and preventative measures and generally keeping in touch without prompting. If your vendor stubbornly holds their cards to their chest or is lackadaisical about communicating future plans that could impact their output or fulfillment, you're left in the dark—not exactly an enviable position for a business on the move.
If you find yourself frequently asking for tracking information, waiting for email responses that never come or leaving unanswered voicemails, it's time to examine the level of respect and professional courtesy your vendor is operating under. As Joel Breen notes in iMedia Connection, secrecy and unreliable performance are generally earmarks of a business relationship about to go sour.3. Bad Vendors Can Destroy a Brand
Consumers are smart and can fact-check, research and review right from their smartphones before making a purchase—and 60% do, according to a Nielsen study quoted in the Washington Post. In this brave new world of the informed consumer, vendors have become an extension of brand identity and, thus, equal parts a benefit and a liability, depending on their own brand identity. Not only are they smart but they will likely submit their own review if they are unhappy.
In new vendor partnerships, a conduct contract will help put fears of ecologically unsound production or other scandals to rest at the negotiation table. If, however, an existing vendor is making negative headlines and there's no contract in place? It's time to step back and distance your brand from those problems. Even a small issue, if it's a persistent one, runs the risk of embroiling your perception capital in a long, difficult stint on the news and discussions about misdeeds that you definitely don't want your name to be linked to.
Your vendor management best practices shouldn't begin and end with pricing and fulfillment—the ease of working with a vendor is part of the value you receive. If you could ask a disgraced company if they could retroactively walk away from a vendor company that brought them down with the ship, it would likely be an easy choice.
Cost is about a lot more than the bottom line, and in that light, the difficult choice to separate from a vendor isn't always as expensive as it seems.