Size Matters (when choosing your suppliers)

I’m a strong believer in considering your supplier choices in the light of the supplier’s capability – but also their size and strategic focus.  If you are a small firm, even your major spend categories won’t mean very much to the largest suppliers of those items. You may think that you spend a lot on laptops, but if “a lot” means you buy 100 or so a year, I can guarantee your business doesn’t really mean much to Dell. It might mean something significant to a local IT dealership, so if you’re concerned about service, then that may well be a better bet.

I’ve had similar discussions in the past around outsourcing. I worked with a firm who waned to outsource payroll. But they had around 1,000 staff on their books, so whilst not tiny, they weren’t really a going to be a major customer for one of the larger outsourcing firms. But there are smaller firms – perhaps younger and hungrier – who would see that as a very good contract and would put real effort into winning and retaining that business.

The same thing applies in the procurement software world. That’s not to say the giants won’t welcome your business, whatever level it’s at, but do consider how enthusiastic they’re going to be, how willing they are to tailor products, how much support you’re going to get. Some providers will get excited about a £50,000 deal, some won’t.

It was talking to Iasta recently that brought this to mind. We mentioned here their strategy to focus on organisations that while not exactly small, are not the very largest global giants. That seems a smart move on Iasta’s part to overtly play to that. They can present themselves as big enough to offer a global approach, but small enough to care about clients who themselves aren’t giants.

If we look more widely, this is also an issue where the involvement of procurement often does not support this approach. Procurement processes that require a lot of work from the bidders, ask questions about size and capability and so on often play into the hands of the giant firms in whatever industry we’re talking about. And whatever size the buying organisation is, but particularly if it is fairly small itself, then that may not be the best answer.  The public sector seems to fall into that trap frequently – and we’ve got more on that topic soon here.

Voices (2)

  1. Charles Dominick, SPSM, SPSM2:

    As the saying goes, great minds think alike, Peter. Here’s a similar article I wrote a few years back: http://www.nextlevelpurchasing.com/articles/business-supplier.html

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