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Selecting the right Suppliers to Integrate

Blogpost by: Adam Stanier
From: Thursday 2 January 2014

IT VAR’s are continually reviewing their supplier networks to ensure they are receiving the best possible business terms, range of product and services from each of their suppliers. Increasingly, VAR’s, as part of their business supplier reviews, are evaluating the technical capabilities the Supplier can offer.

Business terms are typically negotiated on price of product, delivery costs and the real challenge to offer reasonable credit limits to allow the VAR to gain more business.

When reviewing suppliers the VAR finance departments often look to report on the value of business done with each supplier. However, we educate that it is the volume of transactions rather than the total value of business. For example, VAR’s are generally running complex Special Bids, which may be very high value with 1 or 2 specialist suppliers, but only require a very few number of Purchase orders. The VAR may also be doing a lot of run rate business for their clients, which includes many transactions, but for lower value items. In this scenario the priority needs to be with the suppliers that are doing the greater volume of orders rather than the high value orders. Naturally the cost to a VAR to transact an order, whether it is for 10GBP or 10,000GBP is the same. Ensure your Suppliers are working with all messages that give you more internal efficiencies as this is the key factor to protecting your margin.

Suppliers offering technical integrations allow both parties to benefit from reduced costs of transacting business, even if the pricing may not be as competitive as a competitor unable to integrate with the VAR. Where the Supplier is unable to Integrate with the VAR’s business processes, the VAR quickly losses any margin benefit due to the significantly higher cost to administer the purchase process manually.  This level of integration also breeds confidence in the VAR, knowing that their Purchase Orders are successfully delivered and Shipping Notifications are received so they can bill their customer faster. Finally, the supplier will send an Electronic invoice which enables the VAR to process it electronically.

The IT reseller community has embraced EDI as a preferred method to do business with preferred suppliers. Not only is EDI a way to transact business efficiently and retain margin, but it is also a great way to reaffirm your trading relationships with your preferred suppliers.

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Adam Stanier

Business Development Manager UK & Ireland

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