Displacing Incumbent Suppliers

You’ve invested a lot of time and money. You may even have staked your reputation on backing a supplier. So when is it time to replace them?

At a recent executive meeting, the subject of incumbent suppliers arose. The conversation reflected on both the personal and business investment that can occur when a supplier is selected, from a business stakeholder and a procurement perspective.

So when a new supplier knocks on your door and wants to discuss their proposition, do you really want to listen? And if we don’t want to listen, does that mean we are inhibiting our businesses opportunities to improve, expand, and develop? It’s a dilemma we face on a regular basis.

The professional answer is that we are always prepared to consider alternatives. But let’s be honest, that’s not really true. As mentioned earlier, not only have you invested money but also time and effort in your existing supplier - you may have even established personal relationships. It’s easier to stay where you are than to consider the alternative.

Yet, let’s assume we are open to a discussion with a potential supplier. The first aspect we want the new supplier to tell us is “why are you better than what I have today?” and you then sit through any number of presentations talking about their value, yet something seems to be missing. You haven’t heard that compelling statement on why you should change and you’re wondering why.

What we discovered in our conversations is that it’s not the supplier that needs to convince you to change, this is only something you can decide for yourself. You have to be prepared to move beyond where you are today, accepting the previous investment as right at the time yet now looking towards the future.

Here are just a few questions to ask yourself that may help in your decision criteria:

1. “Do you feel you are still getting value for your money?” This is about the value your business is receiving from the engagement, for the time, effort and costs you are investing.
2. “Do you feel valued as a customer?” Sometimes we can feel like a “cash cow” for the supplier rather than a business partner. It’s important for our business to be valued.
3. “Does the solution deliver?” Are you still waiting for that software/hardware/process update that will fix all the existing issues? It’s easy for suppliers to say it will all be fixed in the next version, but we must live with what we have today. It has to be good enough.

If you answer yes to the above, then it does not matter what the new supplier says. You’re probably not ready to change.

If the answers are no, then it really is time to reflect and consider your options. At this point your incumbent will probably offer to lower their price to retain your business but again ask the key questions above and see if you get a suitable answer.

The hardest decision for many of us is moving on, but change does not mean you have to mentally throw away what has gone before. It was right at the time so accept it as a great decision and continue in that trend, asking yourself what is right for the future.  

There are new suppliers emerging every day, and some may challenge decisions we made 2, 5, or 10 years ago. We need to be prepared to consider them. Remember: it’s not up to suppliers to convince us to change; that’s a decision only we can make. The supplier can only demonstrate why we should change to them!