By Ian Hobkirk
Managing Director of Commonwealth Supply Chain Advisors

otherwise indisposed. So, as the summer winds down, perhaps many of our thoughts are turning to major logistics purchases which must be finalized.

At Commonwealth we are currently helping a number of our clients by overseeing various vendor selection initiatives, for WMS software and material handling equipment. It’s given us a good opportunity to reflect on some common criteria which should be considered when deciding on key vendor partners for supply chain initiatives.

Technical requirements naturally vary greatly from one project to the next, and must be dealt with in the context of the challenge at hand. However, a common need on almost every project we’ve been involved with is the desire to find a vendor that is “big enough to get it right, but small enough to care.” Indeed, it is usually difficult to find the right balance between a vendor being big enough to have the resources required to complete a project, but not so big that your project is just a speck on their radar. On the other end of the spectrum, smaller companies may be hungrier for a company’s business and may offer a higher level of service, but they may be too small to execute on large, complex projects.

So, how can a company assess vendors to determine if they fall in the “sweet spot” of size vs. service? Commonwealth offers these three key avenues to explore:

1.    By the numbers

Many privately-held companies may be reluctant to share financial information with clients. However, Commonwealth encourages companies to get at least a high level profile of a company’s financial condition before concluding a deal. Companies may be more willing to share this information under NDA and if access to the financial profile is limited to a small number of your company’s corporate officers, such as the CFO. Specific information to try to ascertain during this review include:

• How large is your project in relation to the vendor’s revenues last year? Somewhere in the 15% to 35% range is often a good target zone.
• How many other projects does the vendor have in-house right now? How large is your project in relation to those projects?
• How large is your project in relation to other projects in the vendor’s sales pipeline?

In Commonwealth’s experience, vendors who have made the “final cut” and are being seriously considered for a contract are usually willing to share some amount of this data with reasonable conditions attached, such as disclosing number and size of projects, but not customer names.

2.    Customer service during the sales cycle

While not quantifiable, customer service during the courtship is often a very good indicator of responsiveness during the marriage. Some things to look for include:

• Has the vendor been responsive to the way that you – the customer – wants to buy their services? Or have they insisted on a sales process which conforms to their preferred methods?
• Has the vendor hit the deadlines which have been assigned to them in the sales process?
• Timetables and designs often change over the course of a sales cycle. Has the vendor been flexible and accepting of these shifts to the plan, or have they found these changes to be annoying or difficult to accept?
• How well prepared has the vendor been during key presentations? Was the presentation a team effort? Were all of the members of the vendor’s team well-versed in your requirements, or were many of the attendees just “along for the ride”?

3. Personalities matter:

Especially at larger companies, the quality of the project often comes down to the experience and personalities of the specific resources assigned to your project. If at all possible, try to meet the project managers and key technical resources who will be working on your project in advance. If the decision date is still more than 30 days away, it may not be reasonable to demand that the vendor assign specific resources to the project that far ahead of time. But, for imminent contracts, this is a reasonable request to make and will provide a good opportunity to sample the experience and bed-side manner of the resources that your team will interact with on a day-to-day basis.

In conclusion, during vendor selection processes, companies often place a lot of emphasis on a bidder’s ability to meet the technical requirements of the project, and rightly so. But, more than one project has gone sideways because the most technically competent vendor lacked the right cultural fit for the job. Commonwealth encourages our clients to give careful thought to the above points when choosing a long-term vendor partner.

In your experience, what matters most when selecting a strategic vendor or partner? Please leave a reply below.