Jeff's Blog

Now that the economy has gotten weak, many companies are looking to their purchasing managers to rein in costs.  This can be a very good strategy for things such as office supplies or other commodity items.  But does it make sense for your IT solutions provider?  The answer to that depends on where the IT solutions provider is on what I call the IT solutions supplier food chain.  The diagram below shows three classes of IT solutions suppliers, tactical, preferred and strategic suppliers.

The tactical IT solutions providers are ones that tend to provide goods and services that are easily replicable by “the masses” and can be put out to bid on specifications and/or service levels.  Preferred IT solutions providers are ones that provide goods and services that are somewhat specialized and therefore are not as easy to replicate.  The highest level of IT solutions provider is a strategic supplier.  These are the vendors that are truly partners.  Many companies call their suppliers a partner, but in this case they really mean it.  The strategic supplier is a trusted advisor, a company that looks out for your best interest and helps contribute to the bottom line.

When the economy gets soft, management puts pressure on everyone to reduce costs.  The purchasing area views this as an opportunity to really put pressure on suppliers for price  This might sound good in theory and might work on more “Tactical” suppliers, but do you really want to do that to your preferred and strategic suppliers?  When that starts happening these partners may not look out for YOUR best interest as much as they did before.  Is that really what you want to accomplish?