It’s a classic movie scene: The dashing young salesperson walks into the office unannounced, and tries unsuccessfully to get past the gatekeeper — the boss’s over- protective, plain-Jane assistant. The charismatic salesman with the Ben Affleck grin, spends some time teasing and flirting with the attention-starved gatekeeper, and before you can say, ‘Mr Johnson can see you now,' the salesperson is being shown into the boss’s office.
Oh,for those good old black and white movie days when gatekeepers were actual people. Not today. Today, the gatekeeper is most likely to be a list— the approved vendor list, to be exact.
“Approved vendor lists are the rage,” said Sid, a vendor consultant. Sid works for a firm that helps other businesses with their approved vendor lists.
“ The original intent of the approved vendor list was to provide companies with a way to to get a handle on who their vendors are ,streamline their costs, and eliminate their good old boy networks, “ explained Sid.
“Do they do that?”
“Usually not, “ conceded Sid. “You could say they are a necessary evil."
“What’s the problem?”
“For starters” said Sid, “ approved vendor lists completely stifle competition. Once you’re on the list your’re in. Everyone becomes complacent. It’s human nature. Without competition, people take it easy.”
“Can’t you just add companies to the list to increase competition?”
“Easier said than done,” explained Sid. “ It can take months, even years to add new vendors. The whole idea behind an approved vendor list is to restrict the number of vendors.”
“Let me get this straight,” I said, “ Are you saying in American businesses today that if a new company comes in with a better process, an innovative idea, a better price, and better service, that organizations won’t talk to them?”
” They can talk, but procurement probably won’t let them get hired. There are exceptions, of course, but the majority of companies that use approved vendor lists, don’t make many exceptions.” Sid said.
Judy was working for a firm that had a closed vendor list. That meant that procurement would not allow any new vendors onto the list under any circumstances, sort of. The problem was, Judy was trying to find a new way to deliver her training and none of the vendors on the "approved" list offered the service.
“I asked procurement what I had to do to get the vendor approved,” explained Judy, “They said, ‘you can’t.The list is closed.’
Judy then asked if there was a may to make an exception. Again, procurement said no. If Judy feigned ignorance and hired the unapproved vendor anyway, she would be subject to a $10,000 fine.
“I take it you didn’t get to do the project,” I said.
“ Actually,I did. After three weeks of bouncing from one division of procurement to another, someone finally told me that I could have the vendor put on the temporary approved vendor list I didn’t even know there was such a thing.”
“ So was it worth all the effort to get the vendor approved ?”
“ Yes and no. Yes, because we added $35,000 to our bottom line that couldn’t have been possible without the new vendor. No, because it delayed the project three weeks, and by the time I finally got the vendor approved I had lost a lot of interest in the project. The fight just took too much energy. I’d never do it again.”
Hoping that this story would have a happy ending, I asked “ Was the vendor eventually able to move from your temporary approved list to the permanent list.”
"Of course not. Our vendor list is closed. That vendor will never make the list and now the temporary approved list is gone.”
“Are you saying that no new vendors are ever allowed on the list?” I asked, wanting to make sure I understand the full implication of what Judy was saying.
“That’s what I’m saying.” confirmed Judy.
“How can that be? “ I asked, truly stunned. “ That seems to violate everything our economy is based on like free enterprise.”
Not according to our procurement department. If asked, they’ll tell you, ‘we have all the vendors we’ll ever need’
Judy paused a moment and added, “ Aren’t we lucky?”
NOTE: SID AND JUDY are pseudonyms to protect their jobs. The conversations are real.
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