The Dangers of Giving Vendors too much Power

Back in the 90’s I worked for Sonoco. The capital project I was on was to install a new maintenance management software in an entire division of the company in order to, mostly, bring down the cost of spare parts inventory. During this project, many ideas for costs savings came up. One of them was that vendor reps should maintain parts usage history and stock the parts we bought for them in the parts room for us. I voice my concerns but since I was just a kid in my 20’s at the time with no college degree, I was promptly ignored and told to shut up.

This turned out to be a monumentally horrible idea as I predicted. Here’s why:

  • Let’s assume your vendor is a good guy. He’s only out for the benefit of you, the client and he wants to keep you as a client. Well, obviously, the last thing he wants is for you to run out of parts otherwise your machines will go down and you’ll yell at him. So the vendor may decide that, just to be on the safe side, he may need to stock a few extra bearings here and a few extra sprockets there because “you never know when they might have a spike in parts usage and we need to be careful and plan for those things.”
  • Let’s assume your vendor is a bad guy. He’s about $600 behind on his sales quota for the month and right now he’s not necessarily out to benefit you. So the vendor may decide that, since he’s the one stocking your parts room and you’ll most likely never notice, he may need to stock a few extra bearings here and a few extra sprockets there.

This is the danger of giving vendors too much power over your stuff. It doesn’t matter whether the vendor is a good guy or a bad guy, you’re screwed either way.

JamesNT

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