Purchasing Strategy
When purchasing big-ticket products or services for your company (or even hiring people), the initial pool of prospective vendors should consist of notable industry leaders plus other vendors who have been referred to you personally by businessassociates or personal connections.
If you have an uneasy feeling, or you don’t fully trust any of the possible vendors, then you should immediately eliminate them from your prospect list regardless of their pricing and services. Importantly, you should be direct and polite to all the potential vendors who have to be eliminated.
When you are done with your basic research and analysis, you should have at least three candidates left to accept offers from and consider further business discussions and negotiations. Look carefully at your final candidate’s portfolios of work, their array of products, and related reviews. You should also research as much information as possible about your targets on the Internet.
Hopefully, you will know people in common who can provide an additional level of reference, and even security, since both of your reputations are at greater risk if you have a broad or closely connected personal network. You may be able to call other clients who are listed as references, but keep in mind that some may be prone to give biased reviews because they may receive discounts or quid pro quo treatment or feel obligated to give a good reference due to personal relationships. Nevertheless, if you ask good questions and you are given objective references, then you can glean useful information for your purchasing and hiring processes.
During the vendor vetting process, there should be many opportunities for you to communicate with each prospective candidate. If his or her assistant is doing most of the emailing and phone discussions on behalf of your preferred principal, you can assume that is how the relationship would play out in the future. Also, if he or she is unprofessional, or doesn’t return your calls or emails as expected, then you can assume it would only get worse after you sign a service contract.
Typically, vendors are on their best behavior before a deal is consummated. So if you don’t like the treatment you get when they are on their best behavior, then you will hate the treatment you get after you are under contract. It’s best to eliminate these sorts of people from your process before you become dependent on their services.
Once you have cleared out all the objectionable vendors, you will be lucky to meet your target of three good-faith offers from trustworthy candidates. At that point, you are also hoping or pushing for the offers to be comparable (apples to apples).
As you continue to review the proposed project’s documentation and your interactions with the vendors, you may be able to decide which ones you favor even prior to having thoroughly reviewed their pricing.
But if you are really comparing apples to apples, and all the vendors and offer formats are essentially the same, and even further, you equally like all the vendor interactions, then price and payment terms are all that matters. The bottom line is the bottom line if all offers provide the same quality level for the same services. So if you like several of the vendors and their offers are practically incomparable, then your decision will be harder to make.
In reality, hiring vendors is not so clear-cut and not necessarily at your unilateral discretion. For example, if you live in the northeastern United States, you probably had to suffer from the notoriously hideous phone services of Verizon and their predecessors Bell Atlantic, Nynex, etc. since they are the monopoly providers in most areas.
Those businesses that absolutely depend on phone services to survive are in a pickle. They have to pay whatever outrageous charges the monopolistic providers throw at them, or they will lose their services and could go out of business. Moreover, they have to accept minimal and poor quality customer services since the incentive to provide quality services is eliminated in monopolistic enterprises.
The same issue exists with Comcast Cable Television, another example of terrible and traditionally monopolistic services in the northeastern US.
With no incentives to improve, monopoly providers can be expected to give consistently bad service. In these two cases, weak pseudo-competitors exist today, but they are still severely handicapped by legacy issues, such as being forced to lease their competitor’s ancient systems infrastructures at non-negotiable prices set by politically and financially influenced utility boards.
