It is a burgeoning reality that businesses need to work faster, better and with greater agility. Big businesses are, for the most part, undergoing a necessary transformation. As part of the “agile” spirit, big companies are needing not only to work in a more entrepreneurial fashion; more often than not, they must work with smaller companies and/or younger entrepreneurs in order to inject the new ideas and talent into their own eco-system. The question that is all too frequently disregarded and needs to addressed: are these smaller companies considered by the big companies as vendors or partners? The vendor mindset is rational. It keeps the outsider at arm’s length. It looks for one-sided victories. On the other hand, the partner mindset is, at its core, about establishing trust.
Vendor or Partner?
Having worked in big business for 20 years, I was able to witness from the inside what types of policies and practices were put in place in terms of vendor or supplier relations. It is rather shocking to see how some large corporates operate with small businesses, especially ones that are of a strategic nature. I think, particularly, in terms of the excruciatingly slow decision-making process and delayed payments. I would soften my comment to nuance that a lot of it comes, not out of deliberate malice, but from the morass of bureaucratic procedures. However, I clearly remember hearing about certain decisions being taken around the delay of payment in order to squeeze out extra interest income. It happens (despite laws that attempt to dissuade the practice)!
When the vendor mindset suits
Without doubt, companies need to negotiate volume discounts, look at synergies and verify that their suppliers are legitimate. Having a purchasing department or buyer (aka cost cutter) has a bona fide purpose, especially when the items being purchased are commodities. This will entail such things as office supplies, media buying, raw materials, etc. (more…)