Every business has some kind of supplier or vendor. It could be a supplier of raw materials; it could be a supplier of ideas or training. For the purposes of this blog, a supplier or vendor is any company that you buy from in order to do business – home builders need lumber and construction equipment while transcriptionists need a telephone line and email address.

So here’s the conundrum: Do you use one supplier or many? There are advantages and disadvantages to both decisions. In the last blog we talked about using just one supplier. Today, let’s explore the idea of having more than one supplier.

With more than one supplier, you reduce the likelihood that the loss of one will keep you from getting the job done. And, it might be possible that each will provide a higher level of service or a lower price in order to win more of your business.

This is good news for you if the raw materials you buy from your suppliers do not need to be absolutely identical or flawless each time, and if they are simple to build or use. A home builder, mentioned earlier in the blog, might consider getting 2×4’s from more than one supplier because they’ll be generally the same and a little minor variation is okay. And, if they use just one supplier and that supplier suddenly runs out of 2×4’s, it could be extremely costly for the builder to put everything else on hold.

There are disadvantages, too. Using more than one supplier might not earn you a bulk discount, and could even earn you a bad reputation if you try to play one off of the other. And there’s another issue, too, as illustrated by this example: If you get your domain name from one provider and your web host from another, you’ll need to figure out how to connect them and get them to talk to each other. That might be a small thing but it can be time consuming and illustrates the larger issue that you might play more of a liaison or management role between suppliers than if you had just one supplier.

If you have more than one supplier, and you need supplies that can handle a little variance, here is how you can mitigate the risks above: Don’t play one against the other for price. Offer to work with a handful of suppliers and specify what is important to you about the relationship. Determine if maintaining a multiple-supplier relationship is going to be more time-consuming and costly than a single supplier relationship. If necessary (and if possible) get your suppliers together in a room and describe your expectations and how you need them to work together to help you deliver your product or service.

Contemporary VA

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Every business has some kind of supplier or vendor. It could be a supplier of raw materials; it could be a supplier of ideas or training. For the purposes of this post, a supplier or vendor is any company that you buy from in order to do business – auto manufacturers will have parts suppliers while coaches might have a "supplier" from whom they bought their domain name and web hosting.

So here’s the conundrum: Do you use one supplier or many? There are advantages and disadvantages to both decisions, and in today’s post (and the one that will follow later this week) we’ll explore this question.

Today, let’s explore the idea of having just one supplier.

With just one supplier, you can generally build a fairly solid relationship. Since you give them 100% of your business, they won’t be hounding you for more of your business and instead you can focus on maintaining and improving the relationship. As well, your supplier will probably be open to working with you to improve the production and delivery of the product you’re buying from them. In many cases, you might also have enough buying power by putting all of your eggs in one basket to get lower prices.

Having one supplier is particularly advantageous when you require products or services that are exacting in some way. With multiple providers, you might get some variance but with one provider you are able to minimize the variance. I’ve seen this in graphic designers, writers, painters, shinglers, and numerous manufacturing scenarios. Whenever you have a situation where variance (in quality, style, or design, for example) will become noticeable, you will probably want just one provider.

There is a disadvantage, too: The supplier could go away and then you’d have to start at zero. Sometimes the supplier might disappear simply because they’ve gone out of business, or sometimes they might decide to stop working with you because it’s no longer profitable (which can happen if you work less on improving the relationship and more on negotiating discounts!).

If you have one supplier, and you only need one supplier, here is how you can mitigate the risk: If appropriate, keep a small stockpile on hand just in case the supplier can’t deliver on time for whatever reason. And, work with your supplier and view that relationship as a mutually beneficial, collaborative relationship. In a way, they are not that different than your employees and they require just as much investment in training and "care" that you would give to an employee.

Contemporary VA

@ContemporaryVA on Twitter.  Follow us to stay updated with our many resources that include business, accounting and bookkeeping, social media, and much more!