Fortunately, truly difficult and opportunistic vendors are rare. But we have all had the experience of the vendor who knows you depend on them and exploits the advantage ruthlessly. They may charge high rates, offer poor after-sales service, demand up-front payment or long lead times for product, or simply take an excessively black-letter approach to contracts. What can you do?
Challenge the behaviour
I’m sure every project procurement professional can name those one or two vendor representatives that they would cross the road to avoid if they could. And I’m sure they will tell you that the vendor rep is being deliberately unreasonable.
But though you may have your suspicions, until you explicitly tell your vendor that you have a problem with their behaviour, you can’t be sure that they are doing it on purpose. They may not realise their actions are causing you a problem. You won’t know the source of the problem until you raise the issue.
You may be dealing with an individual who simply doesn’t realise that they come across as rigid, abrasive or unreasonable.
In the best scenario, merely bringing the issue to your representative’s attention may solve the problem. But it may be an issue that the representative can’t or won’t resolve.
Find the cause
You may be dealing with someone who is known to be difficult, but is such a rainmaker for their company that their behaviour is tolerated if not celebrated. We all know the people whose bad behaviour is overlooked if it is in a company’s interest. You won’t be listened to while the vendor gets more benefit than trouble from the representative’s behaviour.
You may be dealing with a perfectly reasonable person who lacks autonomy or is being directed by their management (for sound commercial reasons) to demand certain concessions or assert power in a certain way. They are caught between a genuine desire to help their client and a need to comply with their own company policy.
Or your representative may be a knowledgeable local who is fronting an international company that simply doesn’t understand normal business practice in your local market.
Escalate beyond the impasse
If you are certain that you can’t solve the problem with the representative, go higher. It’s an old joke that most issues between companies get resolved on the 13th green or the bike track, but sometimes it needs the relationships between senior leaders to break an impasse.
Find a way to make change in their interest
If the vendor is getting an advantage from being demanding, find a way for them to get a greater advantage by being reasonable. Show them that though they may be earning more revenue or getting more work in the short-term, in the long-term, they are encouraging their customers to move away from them. Remind them that they (probably) are in a cyclical industry, and a difficult attitude in the boom times may translate to no work in the lean times.
Offer to faciltate their access to more of your business if they make some concessions. Find incentives to show them it is in their interest to be more cooperative – suggest opportunities to collaborate, propose technology transfer, argue for reduced frequency and scale of disputes.
If you need the product or service but you can’t deal with the terms on which it is available, look to develop alternative vendors. This may be simply a matter of exploring the market more broadly. It may be a longer-term strategy of working with a more amenable competitor to develop their product or service to better meet your needs.
If the product or service is substitutable, find substitute products or services. This may again be as simple as looking more widely. Or it may require some changes to your technical footprint or operating practices to make substitutes feasible.
Change the rules
And finally, change your business model so you no longer need that product or service. If, for example, your issue is with the inflexible terms of a public cloud solution, explore private cloud computing. If poor delivery performance and service quality is an issue for a critical maintenance provider, bring the service in-house.
But whatever you do, if you think there is hope of change, talk to your vendor about what you are doing. Give them the opportunity to do better. You both might benefit.
- “Sustained Monopolistic Relationships: an interdisciplinary case” British Journal of Management Vol. 14 No.4 (2003) pp.323-338
- CIPS Australasia – Dealing with Monopolistic and Distorted Supply Markets
- Watson, Glyn, et al. “Lessons for Procurement and Contract Management Practice in the Public Sector: Evidence from a Quantitative Study.” (2012).