The Channel Angle: Here’s How To Vet Potential Vendors To Reduce Your Overall Risk

‘It is helpful for you to identify what your tolerance for risk is, as each vendor or associated product will have risk associated with them,’ writes Dawn R. Sizer of 3rd Element Consulting.

By Dawn R. Sizer

[Editor’s note: The Channel Angle is a monthly CRN guest column written by a rotating group of solution provider executives that focuses on the triumphs and challenges that solution providers face. If you are a solution provider executive interested in contributing, please contact managing editor David Harris.]

Deciding on your stack and the vendors that supply those products are two of the most important decisions you will make in your business. Having the right vendor, with the right relationship, at the right price point can make or break your business.

Doing your due diligence on those vendors helps to reduce your overall risk. It is helpful for you to identify what your tolerance for risk is, as each vendor or associated product will have risk associated with them. Vendors can tarnish your reputation when they have security incidents, are unable to deliver product on timelines, or cannot offer their product at a competitive price. You are putting a part of your business in their hands when the choice is made to collaborate with them. Be sure you take their reputation and that of their supply chain into consideration.

Every company will have its own selection criteria. Here is the criteria we use and that you can use to investigate any potential vendor.

Customer Satisfaction

No vendor posts how unsatisfied their clients are. Talk to other businesses like yours that use that vendor. Find examples of good and bad interactions, then decide what bad looks like for you and how it relates to what others presented.

Service Levels

Is the vendor able to service your account at the level you need? This answer will change depending on the product and buying cycle. At the very least, find out what control they have over their supply chain and processes. That will give you an idea on how dependable they will be at service delivery.

Financial Stability

Knowing the financial backing of a potential vendor is helpful in determining long-term planning. If they are a startup and run out of capital, what are your options? If the vendor lays off employees, will your service levels and needs still be met? Could your costs go up unexpectedly if that vendor becomes cash poor? Find out what your remedy is if the vendor is acquired, and judge if the risk of the acquisition is beyond your tolerance.

Culture and Relationships

The culture of the vendor should be close to that of your company. If it is not, you will have issues dealing with staff, contracts, and other interactions with that vendor. No relationship is ever perfect but look for vendors that want you both to win in any deal or situation.

Communication

Communication is key in any relationship, and with a vendor it can be maddening if it starts out great, but support is terrible. Be sure all departments communicate effectively. A telling part of communications is how support is managed. For some vendors it is all about closing the ticket. Great vendors focus first on solving the issue, then close the ticket.

Product Quality

Is the product of excellent quality and continually improved? Getting a quality product is nice, but if innovation stalls or quality drops the need to replace the vendor will be swift. Investigate their history with quality control.

Security And Supply Chain

Most vendors will have a supply chain they deal with. Evaluate each part of the supply chain for service level, security, and any compliance they need to account for.

Contracts

What is the tolerance of your company to be locked into a long contract? A confident vendor will offer shorter term agreements, often one year or even month to month. A less mature or more aggressive vendor may seek long term, locked in contracts. Be aware of this and be sure their methodology suits the culture of your business.

Costs

Sadly, we must pay for these products and services. How well you can negotiate rates and types of rewards from one vendor to another can skew costs widely. Choose the best product at the best price point and negotiate from there.

Shortlist vendors that fulfill a role in your product stack or distribution chain. Run them through this selection criteria or add your own. If you do not already have a process for vendor due diligence and selection, this will give you a baseline.

Dawn Sizer is CEO of 3rd Element Consulting, an MSP based in Mechanicsburg, Pa. Her clients span verticals from government to cannabis and everything in between. She is also an advisory board member for CRN parent The Channel Company for XChange.