It’s a hard choice you’re faced with more often than you would like: Do you choose a single supplier for your project or contract multiple vendors to accomplish your goals?
Ignoring the dilemma of vendor selection as its own challenge, even deciding on whether to engage with one, two, or more vendors can inspire you to conjure up a hundred reasons for abandoning the project altogether!
Still, you know the project must be executed. And that brings you back to the inevitable question of how many suppliers to use to execute in the most effective manner.
Benefits and Drawbacks of a Single-Supplier Model
Let’s start with the single-supplier option. The standard view is that it’s always better to have a single supplier. After all, there’s a multitude of benefits:
- Only one company to worry about
- Clearer responsibilities and traceability
- Less administration and overhead
At least, that’s the traditional thinking. But is it really better? For many reasons, it might not be. Consider the opposing view in that a single vendor can also carry too much delivery risk:
- Potential lack of total domain knowledge or key skill shortages
- Good execution, but poor management skills
- Insufficient staff for the required team size
With these aspects known, then it must be better to choose the second option: Have multiple œbest of breed suppliers, each bringing the very best capability in their areas¦right?
But then what about the overhead of directing multiple organizations? There’s the correct allocation of tasks between the vendors, managing interdependencies across the various scopes, promoting collaboration and information sharing, issue resolution, and more.
So, what is the best answer? (Of course, that’s a rhetorical question.)
There is no œright answer. There is only the most suitable answer for the circumstances. The context first needs to be understood:
- What are the characteristics of the project?
- What governance models are available?
- What control do you have over achieving the benefits of any particular model and minimizing the risks?
Sometimes such an assessment is not under your control either. Maybe for smaller, simpler engagements, where there is some in-house expertise, a direction is clear, but usually even that is not available. And what about a multi-phase, multi-stream project with a budget in the millions?
The context has a significant impact on which path to take for a given project.
The Secret Option for Supplier Selection
Well, consider a third option.
Select a single, experienced, and domain-proficient œprime contract supplier to provide the optimal division of activities, management and control framework, and single source to refer to (i.e., to blame!).
In turn, the prime contract supplier is responsible for the selection of the other œbest of breed suppliers to deliver the scope (often not owning the scope themselves). In addition, the primary supplier provides practical and commercial interaction throughout the delivery lifecycle.
It’s a powerful combination. As the client, you get a single and direct delivery and commercial reporting line, but through a steering committee forum, you also have access to all parties. Your prime contractor has a single client and ownership of responsibility and accountability, but also the duty to select and motivate the optimal delivery framework of the various suppliers to ensure success.
Although they may or may not own any of the actual delivery scope themselves, they will bring the skills and control framework to drive all suppliers’ work in a unified manner, rather than having disparate and disengaged suppliers with their own interests forefront in their actions.
Finally, the supplier knows they still have one client, their own scope, an organization appointed to look after their interests in the wider delivery team, and through the steering committee, legitimate access to the other organizations in an equitable and open forum.
This reduces the burden of the challenging decision between one or the other”single or multiple suppliers. Really, it’s the best of both worlds. It’s having your cake and eating it too. It’s¦well, you get the point.
[This was part 2 of a two-part post. Read the 1st part (vendor perspective) here.]
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