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Vendor or Strategic Partner: What’s the Difference?

October 21, 2014

All of the business relationships that your enterprise has established can be categorized as either a vendor or a partner. And, it is safe to assume that most business relationships, if not all, start off as a vendor- client relationship. However, if you choose to continue to move towards a coveted strategic partnership, the responsibilities and expectations of the relationship will change and you must be able to adapt accordingly. While both types of relationships are valuable to the success of your company, creating a partnership rather than just a vendor relationship is sure to yield greater long-term benefits.

The manner in which you maintain the relationship between your business partners and vendors will differ greatly based on the goals you set in the beginning. Before entering into any type of business relationship, here are a few questions to ask:

  1. What is the goal of the relationship?
  2. What are the benefits?
  3. Will you generate increased revenues or save money through a partnership?
  4. What are the risks?
  5. Is it possible that you have underestimated the time and cost of partnering?

To help answer these questions and gain a clearer understanding of who your strategic partners and vendors are, here are a few components that will help to differentiate between them.

Characteristics of a Vendor: 

Vendor relationships tend to be more transactional. While they perform requested tasks, there is less understanding and concern about how your business works and where their services fit in to it.

  • Product/Service- driven: Your interaction with this company is limited to purchasing the product or service they sell.
  • Highly replaceable: Vendor relationships are almost always about competition and lower prices and rarely focus on improved performance and value.
  • Task- Oriented: Once instructions are received, vendors complete their tasks, with little input of their own.
  • Strict deadlines: It is critical for vendors to adhere to a strict production schedule or run the risk of losing you as a customer. Missed deadlines, for any reason, are unacceptable.

Characteristics of a Strategic Partner:  

At the opposite end of the spectrum is where your strategic partner lives. Your partner does more than understand your company’s needs; they anticipate them and provide excellent quality control.

  • Larger stake: Business partners are regarded as a part of the company’s strategy, rather than an outsider.
  • Mutual benefits: As the relationship continues to build and improve over time, there is a vested interest in wanting your company to succeed as much as theirs.
  • Greater value-add: Partners are given the opportunity to provide input and feedback on ways to achieve both short and long-term goals for the partnership.
  • Stronger loyalty: As a trusted partner in your business, you are likely to do whatever you can to maintain your relationship and view the partnership as a long-term investment.
  • Big picture: Being that partnerships are mutually beneficial, strategic partners focus on results and stick around to provide recommendations for improvement. 

While it is obvious, from comparison, that strategic partnerships hold more value than vendor relationships, whether it’s IT staffing or other IT services, each of those relationships are likely to start somewhere in the middle. Identifying your strategic partners and vendors will become easier based on how well they demonstrate understanding of your business model and their willingness to become a part of it. In today’s global economy, your IT department no longer consists of only your employees; it’s made up of partners and vendors. And for this reason you must be able to differentiate to ensure you either mature or maintain the relationship properly.

In your experience, have you dealt with partners or vendors? How were you able to differentiate between the two?

Posted By: Ariana Hampton- Marcell


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