Did you know: Curating a preferred vendors list can be difficult.

Did you know: Curating a preferred vendors list can be difficult.

At first, as a buyer, you may think that it’s easy but, curating a preferred vendors list can be difficult.

It would be great if you can just call a vendor (manufacturer) and begin the process of purchasing right away, right? 

In the case of many buyers, it’s not that simple.

That’s because many times buyers can only purchase directly through vendors within their company “preferred vendors list“. 

If the vendor is on the list, then the buyer is free to spend as they need without hesitation. 

But if the vendor is not on the list, then that buyer just wasted valuable time on something that is bringing no value. 

However, we’ve learned that one of several challenges facing purchasing departments and managers is the process of vendor qualification itself.

In just a few moments, I’m going to share with you what we’ve learned about qualifying vendors. 

This way, you can see why curating a preferred vendor’s list can be difficult. 

This way, you can see why curating a preferred vendor’s list can be difficult.

Then, I’ll mention something we’ve done to help move the industry forward with curating vendors.

But before that, let’s bring you up to speed. 

What is the preferred vendor’s list?

A preferred vendors list is a set of pre-qualified companies or organizations in which buyers are only able to purchase from. 

What is the reason for a preferred vendor’s list?

The reason for the preferred vendor’s list is to minimize the exposure to risk for the buying organization. We’ll cover some of those risks below. 

Who uses the preferred vendor’s list?

Often, these lists are created by mid-level employees who qualify vendors based on the business buying model. 

Then they are made available to purchasing agents, managers, buyers, etc., for sourcing goods or services. 

What is qualifying a vendor?

Buyers have to qualify vendors similarly to how sellers have to qualify buyers.

There is a list of things that a vendor must check off to become part of that buyer’s list of preferred vendors. 

If that vendor does not meet the requirements, then the buyer is not allowed to purchase from that vendor.

The reason for this is to limit the exposure of risk on the purchasing agency if something occurs in the future with the good or service.

What are some examples of areas of qualification?

Vendor Location

Based on the vendor location, buyers must account for logistics, taxation, trade laws, customs and border protection agencies, time to delivery and more. 

The balancing act of this alone is time-consuming and if the vendor fails on any one of the areas mentioned, the buyer may have to restart their search.

Financial status

In many cases, vendors utilize a credit-based system to bankroll their production. 

If that vendor is unable to secure a loan in time, then that means the buyer may miss their production delivery deadlines further causing setbacks. 

Capacity

Unless the buyer is vertically integrated, odds are that the vendor they are vetting has business with several companies. 

Additionally, it means that the buyer may need to dive in deeper in their vetting process. 

Additionally, it means that the buyer may need to dive in deeper in their vetting process.

This is important because the buyer needs to know if that vendor has enough room in their production line for their purchasing needs. 

Compliance

Based on product type, vendors may need to have the appropriate compliance met for purchasing. 

The reason for this is to limit the exposure of risk on the purchasing agency if something occurs in the future with the good or service. 

When thinking of compliance, think of ISO certifications, safety standards, OSHA, Anti-slavery, etc. 

How does Venubi help move the industry forward regarding preferred vendor lists?

Keeping a preferred vendor’s list up-to-date with qualified vendors can be difficult and time-consuming for decision-makers.

Plus, it takes multiple resources and costs a significant amount of capital just to qualify a vendor.

So, what happens when a vendor drops off the list and a buyer needs to replace them as soon as possible?

They can use Venubi Marketplace

Instead of having buyers use multiple sources, attend trade shows, make phone calls, and search through various websites to qualify vendors, they can use Venubi Marketplace. 

Through Vendor Transparency™, Venubi aggregates contextual information directly from vendors and third parties to help buyers with faster decision making.