Why Big Businesses Should Work With Small Vendors

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Big businesses often choose to work with big vendors. But this is not always the right way to go. In fact, sometimes working with a small vendor can have significant advantages. So why aren’t big businesses making the most of these? In this post, we look at some of the perceptions big businesses may have about small vendors, and attempt to debunk them.

Process

Big businesses often have large, complex processes, and expect their suppliers to operate in a similar way. If they don’t, they may consider the supplier to be incapable of providing an adequate solution or service.
But this is a mistake.
Large processes are prone to inefficiency, a lack of innovation, and organisational silos. On the other hand, smaller vendors, with smaller processes, are more likely to be willing and able to modify the way they operate to meet a particular set of requirements. The upshot is that the solution or service they provide will be specific, suitable, and unique.

Natural Selection

Big businesses may assume that big vendors, in virtue of the fact they are big, and have thus experienced previous successes, are better placed to carry out the project they have in mind.
However, many of the successes a big vendor will have had will have been accomplished when that vendor was still developing i.e., when they weren’t so big. Of course this doesn’t mean that vendors perform best when they are still small, but big businesses should keep in mind that everyone has to start somewhere, and that today’s big vendors were yesterday’s small ones.

Risk

Big businesses may be put off working with small vendors on the basis that they may simply not exist in a few years’ time, making the prospect of forging an ongoing relationship seem uncertain or even unlikely.
There is an element of truth here. But what big businesses need to remember is that they’re exactly the sort of clients that keep small vendors in business.
According to Pareto’s law, 80 percent of an organisation’s turnover is generated by 20 percent of their clients. This means that, if a big business is happy with the service they receive from a small vendor, their decision to keep using them will likely play a huge role in that vendor’s chances of survival.

Job Security

Senior managers may be perceived as going out on a limb when choosing to engage a small vendor, especially is that is not their company’s usual course of action.
For this reason, any problems that may arise during the course of the project may be blamed on the manager who took the decision to opt for the smaller vendor in the first place, and may therefore threaten that person’s position. Whereas, if the manager engages the “best” or most expensive provider in the market, s/he cannot be blamed for making this choice — it may even be seen as a generous investment.
Whether this is the case very much depends on the big business’s corporate culture, and some organisations may indeed think in this way. But, in the same way as blame may be allocated to the person responsible for choosing the vendor, so is praise. And since small vendors are likely to be more flexible and nimble, as well as more likely to go beyond the call of duty, senior managers may end up with something that surprises their colleagues in a good way. I guess you’ve just got to make sure you pick the right vendor.

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