Last updated on Jan 23, 2024

How do you decide between vendor loyalty and competitiveness?

Vendor loyalty and competitiveness are two important factors to consider when managing your vendor relationships. But how do you balance them and make the best decisions for your business? In this article, we will explore some tips and strategies to help you decide between vendor loyalty and competitiveness in different scenarios.

1 What is vendor loyalty?

Vendor loyalty is the degree of trust, commitment, and satisfaction that you have with your vendors. It is based on factors such as quality, reliability, responsiveness, innovation, and value. Vendor loyalty can have many benefits for your business, such as lower costs, higher efficiency, better service, and long-term partnerships.

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2 What is vendor competitiveness?

Vendor competitiveness is the ability of your vendors to offer you the best products, services, and prices in the market. It is based on factors such as innovation, differentiation, flexibility, and negotiation. Vendor competitiveness can have many benefits for your business, such as higher quality, lower risk, more options, and better value.

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3 How to measure vendor loyalty and competitiveness?

Deciding between vendor loyalty and competitiveness requires an objective way to measure them, such as a vendor scorecard. This tool evaluates vendors based on various criteria and metrics, adjusting the weights and scores according to your priorities and goals. Examples of criteria include quality, delivery, service, innovation, price, and value. Quality measures how well the vendor meets your specifications and standards, while delivery assesses their timeliness and accuracy. Service looks at their customer service and support responsiveness, while innovation evaluates how often they introduce new or improved products or services. Price compares their pricing to other vendors’, and value measures how much value they add to your business beyond the price.

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Anser Khan

Empowering Careers at CodeForce 360 | Bridging Opportunities | Solutions Architect & Talent Advocate | The 'Answer' man
In my line of work (recruiting), I have to measure loyalty and competitiveness both subjectively and objectively. Is the vendor personally giving me heads up on quality contractors becoming available for new projects? What is the TAT of them providing me with the resources? Are they taking care of paperwork proactively? Are they providing me with skill Matrix of their contractors proactively? These are few metrics I consider while I try to measure their loyalty and competitiveness.
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4 How to decide between vendor loyalty and competitiveness?

When selecting a vendor, there is no one-size-fits-all answer as it depends on your business needs, objectives, and preferences. However, there are some general guidelines to help you make informed and rational decisions. Consider the context of the current and future market conditions, customer expectations, and industry trends to determine your vendor selection criteria and priorities. Also consider the alternatives available in the market and how they compare to your current vendors in terms of loyalty and competitiveness. Moreover, evaluate the trade-offs of switching or staying with your vendors in terms of costs, risks, benefits, and opportunities. Finally, assess the strength and stability of your relationship with your vendors as well as how much you value their trust, cooperation, and partnership.

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5 How to maintain vendor loyalty and competitiveness?

Deciding between vendor loyalty and competitiveness is not a one-time event, but an ongoing process. You need to monitor and manage your vendor relationships regularly, making adjustments as needed. To maintain vendor loyalty and competitiveness, it is important to communicate clearly and frequently with your vendors, informing them of expectations, feedback, and changes. Additionally, recognize and reward performance by acknowledging achievements and offering incentives. Collaborating and innovating with vendors can help find solutions, improve processes, and create value. Negotiating and optimizing contracts is also necessary for optimizing costs, quality, delivery, and service.

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Mohammad Faraz Khatri

Group Manager Indirect/Tech OPS Procurement @ Martin Dow | SAP S4 HANA Power User | Ex-Searle | Ex-OBS | Ex-Colgate Palmolive | MBA
In my experience, nothing can be achieved one-sidedly. We are living in a fast world where a one-sided relationship won't work; it should be win-win for both. Vendor loyalty will be maintained when he is paid well and on time. Given recognition for the project, and ultimately they will exceed expectations. Competitiveness is a continuous process that can be achieved with mutual understanding, experience and efforts
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Muhammad Ahsan Sadiq

CLTD | CSCP | MBA | Engineering | Lead Supply Chain | Estimation ENGINEER | Procurement Planning Logistics Distribution
In my opinion vendor would remain loyal if he’s paid well , on time and a collaborative SRM applied. A negotiation deal shouldn’t be a harm to anyone in the cycle. While the competitiveness is directly proportional to the loyalty subject to the relevancy of the said project. When a pool of vendor is selected to provide quotation, this has to be make sure that the respective vendor has the capability of the job. And once you have good SRM maintained with all of your partners so this will ultimately become the loyal vendor with competitive advantage and performance.
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Farooq HK

HR Manager @ Kibsons International LLC | MBA, New Business Development
It's a two-way street, you take care of your vendors and never think of squeezing them, in return, they will think about you while drafting their proposals to benefit your business
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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Ryan Olson

Executive Business Development Leader Specialized in Technology, Partnership Programs, & Strategic Alliances
Both loyalty and performance are important when looking for vendors. It’s great when you can get a vendor who consistently meets and exceeds performance expectations so that the loyalty can grow in the relationship! When you get that it’s still a great idea to check every one to three years that the vendor you have is still the best value and partner for your needs. You are the steward of your organizations resources and need to do what is best for your organization. Note that this doesn’t necessarily mean that you go with the lowest price vendor but the one that offers the best value and often that can be better understood through long term (loyal) relationships.
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How do you decide between vendor loyalty and competitiveness?

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1 What is vendor loyalty?

2 What is vendor competitiveness?

3 How to measure vendor loyalty and competitiveness?

4 How to decide between vendor loyalty and competitiveness?

5 How to maintain vendor loyalty and competitiveness?

6 Here’s what else to consider

Vendor Management

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How do you decide between vendor loyalty and competitiveness?

1

2

3

4

5

6

1 What is vendor loyalty?

2 What is vendor competitiveness?

3 How to measure vendor loyalty and competitiveness?

4 How to decide between vendor loyalty and competitiveness?

5 How to maintain vendor loyalty and competitiveness?

6 Here’s what else to consider

Vendor Management

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