"We've spent $200 million in advertising and $40 million in consulting fees just to keep our nose above water--there has to be a better way!" - Fortune 500 CEO

Vendor/Supplier Optimization Practice 
Getting your internal organization rowing in the same direction is hard enough; now what about the universe of vendors and suppliers you use to help execute your strategies? How can you be assured the “get it”, and more importantly, how can you be assured you have the right resources to help you accelerate (and not de-rail) your change initiatives?

Which is why AHPL has developed its Vendor/Supplier Optimization Practice in order to help its Clients find ways to improve the return on investments in outside services. Too many companies initiate at great time and expense rapid change strategies without giving proper thought to whether or not their current set of suppliers can continue to add the required value to the new mission.

Often, we hear the following types of questions:

  • How can I be assured that my resources are aligned with my goals ?
  • How can I be assured that I pay fair-value for the services I buy?
  • If I have to consider a change, what's the best process for finding the best new partners?

As Client-side marketers, we’ve asked ourselves the very same questions. As someone once said, the best way to describe the go-to-market process is as the, “Ugly intersection of art and commerce.” This someone knew of what he spoke.

At AHPL, we understand the sensitivities that are often at work in long-term supplier relationships. Loyalty has value, but not at the expense of business realities. And quite frankly, your supplier network can either be the key enablers of the pursuit of improved results, or, can be the anchor that drags the whole process of change implementation down. Trying to affect change without an objective look at your suppliers can be a dangerous thing.

How can be assured my external suppliers are aligned with my goals ?

(Unless you make the effort to check, you won’t know.)

We have observed that many companies do not conduct periodic reviews of their supplier competencies--even when literally hundreds of millions of dollars pass through these vendors’ hands. Too often, what reviews do take place focus on compensation with an eye toward
merely beating the vendors up on price, leaving the larger questions about their relevancy to the corporate goals unanswered.

Which is why AHPL has developed a process and set of tools called the “Vendor Alignment Analysis” that provides an objective view of any outside vendor’s ability to provide the kinds of services required to succeed with new corporate direction. The fact is that nothing stays the same; your company’s goals change and oftentimes, your vendors are not the same folks you hired many years ago. They’ve likely had to cram down their own businesses, trying to do more with less. And many times, companies such as yours have been so focused on getting their internal houses in order, no one remembers to brief the vendors on the new directions. A situation that typically only comes to light when something goes wrong.

With more than 100 years of supplier management experience, AHPL’s disciplined process can uncover potential mis-alignment issues before they result in major in-market breakdowns.

A major global business information company found itself with a transformational new business strategy that sought to unite its 83 country operations within a common brand and marketing mission. The trouble was, these 83 SBU’s had more than 350 outside suppliers that, in effect, controlled the “last mile” of the outward facing communications. After a thorough “Vendor Alignment Analysis” was conducted, it was determined that 83/350 differing points of control would jeopardize the global efforts and a decision was made to consolidate the global vendor/supplier relationship with one sole supplier. Recognizing that long-standing, and in many cases, successful relationships had to be terminated, our analysis showed that the odds of getting 350 independent variables under control were far in excess of acceptable. 5 years after the admittedly painful transition process, the Client has achieved results significantly over plans.

How can I be assured I’m paying fair value for what I’m getting?

(Unless you make the effort to check, you won’t know.)

It is a disturbing, but inevitable, fact of corporate life that scrubbing costs out of organizations has been the primary business strategy deployed by many companies since 2000. Nothing wrong with wringing savings out of people, processes and vendors, but when the effort fails to include consideration of value forgone in the form of new initiative not taken, businesses are setting themselves up for long term failure.

Which is why AHPL has developed a proprietary “Vendor Fair-ValueAssessment” tool in order to help its Clients understand two key issues: a) Am I paying fair-market value for the work product of my vendors, and b) How can I be assured I haven’t cut their costs so that it reduces the value of what I get from them?

AHPL provides its Clients with the ability to benchmark vendor compensation schemes with those of your competition while at the same time providing a high level of transparency into what it costs your vendors to supply the services you require. Thus putting to rest the frequent suspicion that your vendors are getting rich while you’ve gone to single-ply tissue in the rest rooms. Even if your company has chosen the dangerous route of deploying corporate purchasing personnel between you and your vendors, our analyses are critical to forming a quantitative basis of understanding.

A major global supplier of agricultural and construction equipment was going through a global re-examination of its vendor relationships. In so doing, the emphasis from HQ was, “Cut costs; never mind the value proposition.” A year into the process, they found that marketing productivity had cratered. Our analysis indicated that in their zeal to cut costs, many valued and valuable vendors had either walked away from the company, or worse yet, stayed, but cut the quality of the people and the quality of their work product so dramatically that results suffered. After taking another look at the process and re-evaluating the vendors on the basis of value delivered instead of just price, the company has re-engaged with many key vendors and has produced superior results over the last two years.

How can I find the right partners?

(Calling a review and sending our RFP’s isn’t the answer.)

Finding the right partners in today’s environment is a complicated and time-consuming proposition. It’s all to easy to decide that your current vendor relationships aren’t working (and in so doing, covering up what may be some unpleasant issues within your company) Before you charge ahead, AHPL would like to suggest that we have a better methodology for you to consider.

First, have you really done the homework that allows you to conclude a new partner(s) is the right course? AHPL has developed a proprietary tool “Relationship Evaluator” that we deploy to help Clients understand where the problem with a vendor lies. An objective analysis can uncover that the causes of mountainous problems oftentimes have roots in very small molehills, that like the burr under the saddle, become problematic far beyond reality.

If, however, the analysis yields that irreconcilable differences exist, AHPL offers its “Vendor Selection Services” process wherein we will orchestrate the entire process of requirements definition within your own organization, present a a selected list of capable vendors, manage the selection process and assist you with negotiating terms with the eventual selected vendor. As with all AHPL services, we offer to actively participate in the results of your ongoing success by conducting periodic vendor performance reviews that monitor the vendor’s ability to meet or exceed expectations. A byproduct of which is that this process also yields an analysis of your organization’s success in holding up its end of the bargain.

We have conducted and participated in hundreds of vendor reviews and competitions from both sides of the fence; and we know what does and doesn’t work.

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