The nuts and bolts of working with outside vendors

By Brian Coon

Owner/CEO of Genesis Servicing Corporation

In the wake of a punishing recession, companies not just in Detroit, but across the nation are looking to find new ways to save money and create new efficiencies. It is only natural that for many, a belt-tightening process and rigorous self-analysis will involve an assessment of existing business processes, and an inevitable discussion about the value of services provided by outside vendors. Should you begin to make use of outside vendor services? If vendor relationships are already an integral part of your existing business model, should you continue to rely on outside vendors? What kind of value should you expect from a vendor, and what can you do to maximize that value?

Leveraging an outside vendor does not make sense for everyone, but the opportunity to develop a professional relationship with a skilled partner that can complement, supplement or enhance your existing products and services is a valuable one. Working with a reputable outside vendor offers a number of potential benefits for their partners. Whether it is saving time, money, delivering otherwise unobtainable full-scale solutions, providing an enhanced degree of flexibility and adaptability, or simply offering an outside perspective, the specialized professional services of an outside vendor can be a difference-maker; both in good times and in bad.

While the role of vendors varies dramatically from one industry to the next, and the precise details of how vendor relationships function depend heavily on firm- and industry-specific details, there are a number of consistent principles that apply to virtually all vendor relationships. For many firms, utilizing outside vendors makes financial, logistical and professional sense. What follows is a brief review of some of the practical steps any firm can take to ensure that they understand and take full advantage of the vendor-related opportunities available to them.

Make a value proposition

Understandably, many of the primary questions most firms ask when it comes to evaluating the pluses and minuses of using an outside vendor pertain to cost. While the balance-sheet equation might be straightforward, the real answers to these cost-benefit questions are a little bit more complex. Some vendors are able to leverage efficiencies and expertise and deliver goods and services at a more favorable price point, a circumstance that is generally a win-win for all parties. Even when a vendor’s fee is comparable or slightly more expensive up front, however, many firms choose to work with vendors, understanding that while they will not necessarily save a significant amount of money on the front end, a well-chosen vendor can help deliver an extraordinary amount of value. In a very real sense, the process of selecting a trusted vendor and establishing an efficient and beneficial working relationship presents an investment in quality, experience, efficiency and consistency that pays off – and then some – in the long run.

Prioritize efficiency

Whether a company is looking to work with outside vendors to fill a specific niche by providing a highly specialized service, or is interested in establishing a more significant scope of services, one of the key attractions of a productive vendor relationship is the potential gain in efficiency. The specialized nature of the services that vendors provide is inherently structured to reward that specialization with ongoing opportunities to refine and improve an already streamlined service model. From investments in physical infrastructure to investments in training, professional processes and personnel, vendors are frequently able to provide the quality, speed and service that companies demand, but are unable to do themselves. From shorter timelines to increased attention to detail and a level of quality service that would be impractical or unaffordable for most firms to achieve independently, vendors are able to do what they do best faster and better; ultimately passing those advantages on to their clients.

Reduce the risk

For many professionals, one of the more appealing aspects of working with a vendor is the ability to reduce or eliminate their exposure. The costs of addressing potential liability are significant, and the opportunity to pass those expenditures on to a vendor – who is necessarily equipped to handle that liability – can be invaluable. For some firms, liability plays an enormously important role in structuring their business processes and guiding their vendor selection process; making it possible to literally select the most risky or complex services and outsource them to a qualified outside vendor.

Take advantage of expertise

The advantage of working with experts is self-evident. The same dynamic that works so well in our everyday lives – calling a plumber when the sink is leaking, or hiring a contractor to oversee a home renovation – is at play in the business world as well. Experienced vendors who have demonstrated expertise in a particular service area can function as valuable consultants, providing a depth of insight, experience and skill that makes any additional cost well worth the investment.

Outside perspectives

The most functional and productive ways of doing business are not always obvious to the management of that business. There is such a thing as being too close to obtain the perspective needed to engage in a productive and impartial analysis. Trusted and experienced outside vendors deliver a unique opportunity to provide that perspective; helping to identify new opportunities, eliminate costly inefficiencies, and introduce new ideas that can ultimately save time, money and headaches.

Take advantage of high-quality service

While more favorable finances, new efficiencies, reduced risk and a higher level of quality are all very appealing, for many firms, the question of whether or not to work with outside vendors comes down to a more gut-level consideration: do they want to spend time engaging in the critically important but sometimes burdensome details of day-to-day operations, or do they want to do what they do best and serve their clients? Whether it is human resources and personnel management, technological infrastructure and IT management, or bookkeeping and delivery systems, working with outside vendors is a great way to make the best use of your time by making it possible for you to focus on your core business.

Brian Coon is owner/CEO of Genesis Servicing Corporation, a real estate services provider specializing in title services, property tax searches, document management, property preservation, appraisal management, inspections and short sale management. Coon can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 248.626.2036.