05/01/2015

By Philip Letts, CEO, blur Group


Everyone’s ‘on board’, the finances are in place and research indicates that your latest initiative could make all the difference to your bottom line numbers. Now’s the time to get your project off the ground – but how will you deliver it? Resource everything in-house, buy in some services, or outsource?
It seems most businesses keep using the same partners they already work with rather than look at the best fit for the new project.

Innovation has never been more important.
The business landscape is more competitive than ever as barriers to international competition and markets break down. Yet, three in five business buyers agree their companies need a services ‘refresh’.

There are flaws in the selection of services suppliers, and loyalty and personal relationships play too big a role. How can you ensure your resource choice makes your business stand out from the crowd and deliver the results you expect? Here are four signs you might need to take a little break from your existing partners.

You think you could do better
More than half of businesses think there are better providers than their current partners. Using external service providers entrusts key business processes to a partner. These partnerships must adapt to your business model and be flexible enough to accommodate your changing business needs. Allowing a new service provider to fulfil your project needs gives you a fresh view on your business demands and provides your business with the opportunity to improve performance. Too many businesses think maintaining relationships saves time and money spent in the procurement process, but this is a common misconception, that often comes at the cost of improved ideas, performance and results.

The spark has gone
80% of providers think pitches are won by companies with existing relationships rather than the best ideas. As business becomes increasingly digital, frequent developments and innovations need an agile and responsive reaction to new opportunities. It’s important that businesses don’t limit themselves to a small group of suppliers who have little or no incentive to give an improved service and consequently improve the competitive edge of their customer; whilst businesses that offer real competitive edge are being shut out from the contract-awarding process, effectively barring and deterring innovation and improving business performance.

You're just going through the motions
42% of business buyers say it’s rare to partner with a provider they have no previous relationship with. A key admission from those surveyed is that some of the reasons they may not be working with the best providers for their business is because they have strong individual relationships which sway their decision-making. Staying competitive in business is about getting the best results for your company and clients, and the best product or prices for your customers and you can’t let personal relationships stand in the way of that.

You're past the honeymoon period
Nearly 50% of businesses engage with the same partners for longer than they feel they should. Keeping a long-term relationship with a service provider often results in that provider offering fewer creative solutions as time goes, with creativity expected to diminish after 4.4 years.

In most procurement functions the preferred supplier list is the definitive document. It tends to be refreshed and updated on a regular, fixed-time period and in between those times, it’s only under exceptional circumstances that a new supplier can cross into this territory.The business benefits from having negotiated fixed terms and contracts so that any purchasing manager will be able to know exactly what they can or expect to pay and what and who will deliver.

The downside is to both buyer and supplier. The buyer struggles to bring in new skills and expertise. This is often seen when specific new project requirements are identified which are outside the scope of existing suppliers. Technology has changed they way almost every area of business functions yet procurement processes are often functioning in the same way they have forever.

Online marketplaces remove the need to use procurement tools or processes to source suppliers globally. The rise of this method of buying gives business of any size a secure way to build up supplier relationships, or source one-off needs without impacting on existing processes. It is fairer for the services provider who won’t need to resort to a host of different tactics outside the pitch process to be visible to new business.