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If you’re been following Panjiva, namely their blog, their press releases (sign up at your own risk), or their twitter feed, you know that they’ve been preaching doom and gloom for months where global trade and supplier viability is concerned. Well, this has been backed up by a recent CPO Agenda survey, summarized in their recent article on balancing the cost-risk equation, that found that nearly half of the respondents have already experienced the bankruptcy of at least one key supplier since the year started and that over three quarters are (very) concerned about the prospect of other key suppliers going out of business before the year is over.
In plain English, if you haven’t lost a key supplier yet, it’s just a matter of time before you do. The only question is, will you know which one before the shipment fails to arrive and the line goes dead?
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Integrated Solutions recently ran a fantastic article that had a very simple 3-point Vendor Selection Checklist that is undoubtedly the best I’ve ever seen for determining whether or not a vendor should make your short list. Although you should go through a long and detailed solution review before initiating a long term relationship with any vendor where enterprise software and services are concerned (due to the amount of money involved and the fact that your business could literally be riding on the success or failure of the systems and services you’re contracting for), you don’t want to go through that process unless there is a very good chance that the vendor is stable, in it for the long-haul, known for good solutions and service, and willing to work with you.
Although I would not have believed it before recently, I have to admit that this very simple 3-point checklist is sufficient to weed out many of the vendors who would not make your final cut if you went through a longer process. So without further stalling, here it is.
- Do They Advertise?
The author of the article asks would you purchase a new car or HDTV from a company you never heard of? (No.) So why should you buy software for your business from a company you never heard of? (You shouldn’t.) Well, even more relevant is the fact that in tough markets, there is a strong correlation between those companies who are constantly advertising (especially on new media) and those companies who are doing well, and an even stronger correlation between those companies who have not been advertising for the past year or two and who are now in a difficult financial situation. A significant number of the smaller companies in this space (including some of the more innovative companies that have been profiled on this blog) are not in the best financial shape right now. A number have not only had to cut NPD budgets, but had to layoff staff (and, in a few cases, between 30% and 50%.) Most of these companies have not been advertising (either because they thought their money was better spent on NPD, because they thought they couldn’t afford it, or, in some cases, because they thought they didn’t need to) over the past two years. Right now, where this space is concerned, if they’re not advertising (in the trade pubs, through professional organizations, on the blogs, etc.), I’d say there’s a 4/5 chance that either they’re not that strong financially, or at risk of becoming not that strong financially with even a small shift in the market breeze. Out of sight, out of mind is never more true than it is in a down market (where everyone is overworked or operating in panic mode and without the time to search out for solutions they haven’t heard of).
- What do your peers say?
Find out who their customers are, narrow the list to those in related verticals who have been customers for at least a year or two (so the “blush” has left the rose), and talk to them. If the general consensus is not reasonable satisfaction, chances are, in this economic climate, some of those customers won’t be renewing, and in these times, that will probably put the vendor in a tough financial situation, which will make it difficult for the vendor to support you.
- What do the experts say?
Advertising tells you that they’re likely stable (but be sure to ask focussed questions during your detailed review), and your peers tell you that you’re likely to receive good customer support (as long as you insure they have the expertise you need), but you still need to insure that the solution is solid before you spend a lot of effort investigating it. Look at what your favorite bloggers and analysts have to say before investing too much time on a detailed analysis. If it’s a good solution, it should have at least a few rave reviews from trusted experts in the space.
Like I said … it’s a great list that can save you a lot of time as you can use it to weed out vendors who aren’t worth a detailed analysis.