Diversifying your supplier base is often referred to as the procurement world’s best kept secret—but let us be the ones to spill the beans. If you’re looking to improve your bottom line, lower your overall operating costs and spend less on your procurement operations, then diversifying your vendor list is a decision you’ll want to make for your business.

Don’t take our word for it, though. Consider the findings from Atlanta-based consultant firm Hackett Group that found companies that commit to a long-term supplier diversity program can generate a 133% greater ROI than businesses that source product from a small, static list of vendors. Further, the report released by the Hackett Group found companies with diverse vendor lists drove an additional $3.6 million to a company’s bottom line for every $1 million spent on operations costs in procurement.

So, howexactly does having a diverse vendor list improve ROI and your bottom line? Here are just a few reasons:

1. Vendors Will Fight For Your Business
   It’s no secret that if vendors know they’re not the only horse you have in the race, they’ll typically do anything they can to win your business. Whether you’re looking for a lower price, a closer store location or a tighter delivery window on an out of stock product, vendors will move mountains to accommodate your needs if there’s a possibility they could be bested by a competitor.
2. It Encourages Innovation
   In almost every industry, but particularly in construction and design realms, the longer your company has been around, the tougher it becomes to find opportunity to innovate. The “if it ain’t broke, don’t fix it” mentality seems to permeate a lot of operations and procurement in businesses with a static lists of suppliers, which ultimately puts up a road block to innovation and removes creative potential for company improvement. By working with a diverse list of vendors, you expose yourself to new ways of operating and even untapped markets.
3. Expand the Depth and Breadth of Product Selection
   Working with a diverse list of vendors also offers you a diverse selection of products. Reaching out to a wide range of suppliers offers you the immediate reward of a wide range of products, and is arguably the only way to source niche or specialized products that your clients may love that you wouldn’t have been able to source from your static list of suppliers. To get new and innovative products, you have to open yourself up to new and innovative partners.
4. Reduce Stock and Delivery Related Project Delays
   Having an expansive and diverse list of suppliers to choose from means that you also have an expansive and diverse selection of inventory and locations to choose from. Diversifying your list of vendors grants you access to a selection of distributor locations and a safety net of product stock, allowing you to select suppliers that work best for your jobsite and project timelines.
5. It’s Absolutely Free
   Okay, so there’s a catch to this one. Although traditionally diversifying your vendor list would be somewhat costly in terms of company time, there are programs and online marketplaces that offer you all the benefits of a broad list of suppliers, with zero drain on your business’ resources. Marketplaces are online stores where products and information are provided by third party vendors from around the world. These e-commerce sites grant you access to hundreds of top tier suppliers across the globe, hundreds of thousands of products and a heavyweight supply chain dedicated to getting your home improvement and building materials exactly where you need them to be. And the biggest benefit of all? It’s absolutely free to shop these sites.

Hopefully it’s clear by now how diversifying your supplier list will help improve your business’ bottom line by inviting innovation into your operations, vendor relationships and even your choice of product. Although manually procuring and maintaining a diversified list of vendors can potentially be a drain on resources, even with the help of management tools, in the end the easiest way to diversify your client list is to let someone do it for you.

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