An area with great opportunity for capturing new value is in vendor relationships. Yet for all the unmined gold in this hill, this is an area that companies rarely leverage anywhere near to its fullest potential. Most companies think capturing a percentage here or there in an occasional vendor negotiation is as much as they should expect. This is far from the case.
In dozens of turnarounds, I have participated firsthand in facilitating negotiations, strategic thinking, innovation and performance improvement dialogues with vendors. Often, the innovations with vendors have served as the primary keys to saving a company from ruin. But you don’t need to be on the ropes to use this growth lever. I use a handful of questions—see them below—when guiding clients through a dialogue on how to innovate vendor relationships and capture new value—ideally for both your organization and your vendors.
Another Tactic
Use depth interviews with vendors, not just your customers. You may catch vendors off guard when you have a third party call them to facilitate a conversation about how we can innovate the relationship and show that both parties can capture new value. However, if executed in earnest, then this practice will ingratiate vendors and likely uncover new value for the both of you.
Vendor relationships have far too much opportunity to not develop them more fully.
Some questions to consider using in your dialogues on innovating vendor relationships:
1 How easy is it for your vendors to drive up prices?
2 How unique are your key inputs—both products and services?
3 How abundant or scarce are quality suppliers?
4 How can you partner with your vendors to mutual benefit?
5 How can you leverage your power with suppliers with whom there is no partnering potential?
After dialoguing on those questions, you’ll want to peel back deeper with action-oriented questions and challenges that can foster innovation and improvements:
6 How could we prevent or neutralize this problem?
7 How could we accentuate our strengths here?
8 How could we create more competition or gain new insights that will give us leverage in this area?
9 What types of forums could we consider using to make the most progress in the relationship?
Mark Faust works with owners, CEOs and sales managers who want to grow their businesses. You can schedule a free growth ideas session with Mark. Simply book your time by visiting https://calendly.com/markfaust
