5 Benefits of Vendor Consolidation in Data Centre Procurement

5 Benefits of Vendor Consolidation in Data Centre Procurement

Posted by Helen Canny on Mar 26, 2019 3:36:16 PM

Over the past decade, technological advances have exposed procurement managers to a global pool of vendors. This has given rise to a new era of multi-vendor procurement, where several vendors are being utilised in order to secure the best possible price for each infrastructure group. On the surface this modern approach to data centre procurement appears to present a competitive advantage. However, what a lot of procurement managers have yet to realise is that working with a variety of vendors can often over complicate the project – Whether it’s the increased administration required or the lengthy process of integrating all deliverables into one complete data centre power solution. The bottom line is that complex processes take more time to manage – And time costs money, therefore it is vital for businesses to adopt more efficient procurement practices such as vendor consolidation to simplify projects.

As the term suggests, vendor consolidation involves shrinking the supply chain, so a lesser number of vendors are each working on a larger proportion of the project, providing the business with a wide range of advantages.

1.Purchasing power

By awarding a larger volume of purchases to fewer vendors, each vendor can benefit from the cost savings associated with bulk production – For instance less time is required to process the bulk order compared to multiple smaller orders. This increases the purchasing power of the data centre procurement manager as suppliers will be more willing to negotiate a more competitive price, based on savings made at the production stage. This principle disproves the theory that there is any definite cost advantage to sourcing multiple low-cost suppliers for each product as opposed to consolidating purchases into a larger order from a single vendor.

2. Accountability

A high level of vendor accountability is required to ensure that projects run as smoothly as possible and that any issues are resolved promptly and professionally. Accountability can be an issue when dealing with a range of vendors. If one vendor is underperforming, it is often easy to pass accountability onto one of the many vendors involved in the project in order to protect their own reputation. This can begin a merry-go-round of blame, resulting in costly project delays until the dispute has been resolved – The problem is that often it can be difficult for the customer to determine which vendor should be held accountable for delays.

Better accountability can be achieved through vendor consolidation, as contracts will be less complex with less vendors to hide behind should any issues arise. This sense of responsibility results in effective and efficient delivery of product or service.

3. Project Management

Managing a lesser number of vendors reduces the amount of administration required i.e. setting suppliers up on the system, managing vendor contracts and payments. Additionally, the longer the line of communication is the more likely it is that information can get lost in translation causing costly errors to be made. For this reason, vendor consolidation is extremely beneficial for data centre projects, where any miscommunication of the technical specification could result in significant and costly project setbacks.

4. Relationships

Vendor consolidation facilitates the formation of strong business relationships, as the data centre procurement manager will have more time and attention to focus on the select few vendors they have chosen. As vendors are benefiting from large bulk orders, they should feel a special obligation to accommodate project requirements. The mutual reliance on the vendor to deliver such a large proportion of the data centre infrastructure and reliance on the customer to provide lucrative repeat business, helps to build a strong and lasting relationships based on trust. Vendor trust is important for any business, but especially so in the data centre industry due to its mission critical nature – A solid vendor relationship will give the customer peace of mind that all infrastructure will be delivered on time and in line with the project specification.

5. Performance

In order to run a successful data centre all infrastructure must be fully optimised and integrated to work as one complete and efficient system. When purchasing from a wide range of vendors there is a risk that disparities between the processes and technologies used in production will cause problems with the overall operating efficiency of the data centre. By consolidating vendors, there will be less disparity in the number of processes and technologies used to develop the data centre infrastructure, simplifying the integration process.

E+I Engineering manufacture complete global power distribution systems including medium voltage switchgear, low voltage switchgear, busbar systems, modular fabrication solutions and energy management systems. All infrastructure is manufactured and integrated within the one factory environment resulting in a significant reduction in on site man hours. The vertical integration of the business gives E+I Engineering’s full control over the supply chain, quality control and system integration, resulting in reduced project lead times

As an expert in global power distribution, quality and service is our priority, with each of our clients allocated one dedicated project manager to guide them through the process from the initial concept right through to project delivery.

Topics: data center, Vendor Consolidation, Procurement

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