NPI Perspectives on Vendor Relationships

Fair pricing and terms
aren't the only indicators
of the best deal.

Does your vendor make doing business easy?

When you make a major purchase with a vendor, you’re signing up for a long-term relationship. So, what happens if that vendor isn’t easy to work with? NPI’s experience shows that even if that vendor gives you the lowest pricing and fairest terms, they may not be your best choice.   Unfortunately, it’s hard to gauge a vendor’s score on the “ease of doing business meter” if you’ve never worked with them. Most companies find this out only after the ink is dry. However, there are ways to benchmark this factor – starting with asking the right questions:
  1. How difficult is it to engage and get information from them?
  2. Is the vendor’s account team knowledgeable?
  3. Is their pricing clear? Or is it convoluted?
  4. Are their pricing and terms structured so that you can easily predict costs associated with future demand?
  5. Do their business cases make sense when they are justifying pricing to you, or are they simply trying to meet their quarterly sales numbers?
  6. Does the vendor offer flexible usage/pricing that can expand and contract with your business demands?
  7. Is the contract clear and easy to understand? Does it demonstrate reciprocity (e.g. customary and reasonable protections both for you and for them)?
  8. Is their account management and governance model documented and easy to understand?
  9. How do their customers grade their support?
  10. Finally, have they been honest in past dealings?
  If your vendor is lacking in any of these areas, beware. It may indicate deeper vendor management issues to come. The best vendor-client relationships are those that are rooted in fair dealings, facilitative interaction, fair pricing and terms for both you and the vendor, and transparency.

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