Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing
Many National companies are faced with the dilemma of trying to control the sourcing of products and services across their company in a way that consolidates what they purchase and helps them control who they are working with. Many times our customers will tell us that they are only interested in speaking with companies who can handle their entire company; only National providers will be considered. The SafeSourcing recommendation frequently will be to expand that vision in order to create an opportunity for greater overall value, and possibly better savings.
Today we will be looking at the advantages of each of the three geographical levels that companies can employ when setting up their projects and why a good mix of all three can create greater opportunities for success for your company.
National suppliers – There are some obvious advantages for selecting National providers to be involved with sourcing projects. As you grow they will have the infrastructure in place to support you and your business. In many cases they have a support system and reporting system that can assist you with tracking what you are spending and where those products and services are being delivered to. National suppliers have the size to be able to reduce the overall costs of the items you purchase but they also have the overhead and internal expenses that it takes to maintain a National company. National companies tend to have larger market share and recognition so their aggressiveness in competing for your business may not always be in line with that of the regional and local suppliers who are looking for any way to get some of your business.
Regional suppliers – Regional suppliers tend to cover 20 to 40% of the country and focus on a specific area such as the Northeast, Southeast, West Coast, etc. The advantages of the regional supplier are that they are large enough to be aggressive in price and to offer great value-add services but they are focused enough to know the area they are servicing. Regional suppliers have typically mastered the logistics of their shipping lanes and many times know the culture and the people in the area better than a National supplier does. While having multiple suppliers loses some of the advantages of having a National program, the services and prices may indicate a 2 or 3 supplier award makes the most sense for the company.
Local suppliers – Local suppliers who handle either a city or an entire state, are typically brought into a procurement event for one of two reasons. They either are an incumbent of one the locations currently or they are being reviewed for a rural area that is not supported well by a national or regional supplier. Local suppliers have the flexibility to be aggressive in pricing (especially for services) and they can usually support rural areas better than larger companies. Having local companies involved gives incumbents a chance to fight for the business they have previously had and possibly win new business and it provides great options for locations that need special attention. Local suppliers will also ensure that the regional and national suppliers are staying competitive in the service levels, terms and pricing they are offering you across the company.
The mix of suppliers you invite to your sourcing projects are every bit as important as the history and specifications you supply those suppliers and developing a strategy of the right mix will be important to how successful your projects end up. While you may intend on finding one National provider, the value offered may demand you consider a 2-3 company award at the end and having options at the local level for special situations and emergencies is something every company should have a contingency plan for.
For more information about how we can assist you with developing these supplier selection strategies, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.
We look forward to your comments