Choosing the right supplier is a critical decision for any business and even more so for today’s data center procurement specialist. Due to the highly technical nature of modern data center and mission critical facility designs, efficiency and reliability are essential requirements that must be considered right along with the cost of goods and services to be purchased.
Over the past decade, technological advances have exposed procurement managers to a global pool of vendors that has given rise to a new era of multi-vendor procurement where multiple vendors are utilized in order to secure the best possible price for each infrastructure group. On the surface, this modern approach to data center procurement appears to present a competitive advantage.
However, what many procurement managers have yet to realize is that working with a variety of vendors can often over-complicate a project. Whether it’s the increased administration required or the lengthy process of integrating all deliverables into one complete data center power solution, the bottom line is that complex processes take more time to manage. It is therefore vital for businesses to adopt more efficient procurement practices such as vendor consolidation to simplify the process.
As the term suggests, vendor consolidation involves shrinking the supply chain so a lesser number of vendors are each working on a larger portion of the project, providing the business with a wide range of advantages.
By awarding a larger volume of purchases to fewer vendors, each vendor can benefit from the cost savings associated with bulk production. For example, less time is required to process the bulk order compared to multiple smaller orders. This increases customer purchasing power as suppliers will be more willing to negotiate a more competitive price based on savings made at the production stage. This principle disproves the theory that there is any definite cost advantage to sourcing multiple low-cost suppliers for each product as opposed to consolidating purchases into a larger order from a single vendor.
A high level of vendor accountability is required to ensure that projects run as smoothly as possible and that any issues are resolved promptly and professionally. Accountability is often an issue when dealing with a wide range of vendors. If one vendor is underperforming, it is often easy to pass accountability onto one of the many vendors involved in the project in order to protect their own reputation. This can begin a merry-go-round of blame, resulting in costly project delays. The problem is that it can often be difficult for the customer to determine which vendor should be held accountable for delays.
Better accountability can be achieved through vendor consolidation, as contracts will be less complex with less vendors to hide behind should any issues arise. This sense of responsibility results in effective and efficient delivery of product or service.
Managing a smaller number of vendors can reduce the amount of administration required i.e. setting suppliers up on a system, managing vendor contracts and payments. Additionally, the longer the line of communication is, the more likely it is that information can get lost in translation causing costly errors to be made. For this reason, vendor consolidation is extremely beneficial for data center projects, where any miscommunication of the technical specification could result in significant and costly project setbacks.
Vendor consolidation facilitates the formation of strong business relationships. Customers will have more time and attention to focus on the select few vendors they have chosen and as vendors are benefiting from large bulk orders, they will feel a special obligation to accommodate project requirements.
The mutual reliance on the vendor to deliver such a large portion of the data center infrastructure and reliance on the customer to provide lucrative repeat business, helps to build strong and lasting relationships based on trust. Vendor trust is important for any business but especially so in the data center industry due to its inherent mission critical nature. A solid vendor relationship will give the customer peace of mind that all goods and services will be delivered according to schedule and in line with project specifications.
Managing a successful data center means that all infrastructure must be fully optimized and work in concert together as one complete and efficient system. When purchasing from a wide range of vendors there is a risk that disparities between the processes and technologies used in production may cause problems with the overall operation of the data center. Consolidating vendors means there will be less disparity in the number of processes and technologies, thus simplifying the integration process.