If you’re looking to improve your bottom line, lower your overall operating costs and spend less on your procurement operations, then diversifying your vendor list is a decision you’ll want to make for your business.
Don’t take our word for it, though. Consider the Atlanta-based consultant firm Hackett Group's findings that companies that commit to a long-term supplier diversity program can generate a 133% greater ROI than businesses that source products from a small, static list of vendors. Further, the report released by the Hackett Group found companies with diverse vendor lists drove an additional $3.6 million to a company’s bottom line for every $1 million spent on operations costs in procurement.
So, how exactly does having a diverse vendor list improve ROI and your bottom line? Here are just a few reasons:
It’s no secret that if vendors know they’re not the only horse you have in the race, they’ll typically do anything to win your business. Whether you’re looking for a lower price, a closer store location, or a tighter delivery window on an out-of-stock product, vendors will move mountains to accommodate your needs if there’s a possibility a competitor could beat them.
In almost every industry, the longer your company has been around, the more challenging it becomes to find innovative opportunities. The “if it ain’t broke, don’t fix it” mentality seems to permeate many operations and procurement in businesses with a static list of suppliers, which ultimately puts up a roadblock to innovation and removes creative potential for the company's improvement. Working with a diverse list of vendors exposes you to new operating methods and even untapped markets.
Working with a diverse list of vendors also offers you a diverse selection of products. Reaching out to a wide range of suppliers offers you the immediate reward of a wide range of products and is arguably the only way to source niche or specialized products that your clients may love that you wouldn’t have been able to source from your static list of suppliers. To get new and innovative products, you must open yourself up to new and innovative partners.
Having an expansive and diverse list of suppliers to choose from means that you also have a broad and diverse selection of inventory and locations to choose from. Diversifying your list of vendors grants you access to a selection of distributor locations and a safety net of product stock, allowing you to select suppliers that work best for your job site and project timelines.
Okay, so there’s a catch to this one. Although traditionally diversifying your vendor list would be somewhat costly in terms of company time, Babelus offers you all the benefits of a broad list of suppliers with zero drain on your business’ resources.
Babelus uses algorithms and expert intervention to generate very high-quality supplier lists. In addition, the platform comes with an RFI module that allows you to collect customized data from suppliers, generating highly accurate shortlists.
And the greatest benefit of all? We put all the superbly digitized suppliers in one place at your fingertips.
Hopefully, it’s clear by now how diversifying your supplier list will help improve your business's bottom line by inviting innovation into your operations, vendor relationships, and even your product choice.
Babelus saves that exhausting manually procuring and maintaining a diversified list of vendors that can be a drain on resources, thanks to management tools.
In the end, the easiest way to diversify your customer list is to let a digital solution do it for you.
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