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COLUMN: What Supplier Consolidation Might Mean To Your Business

The Channel Company's Executive Chairman Robert Faletra says that solution providers are in a better position if they have alternatives to suppliers.

I've never been a believer that solution providers should be completely dedicated to a single vendor in any category. Betting everything on a single supplier can be dangerous should that supplier fall into a difficult situation itself.

This is not to say it doesn’t make sense to be highly focused and prefer to push one manufacturer over another. It’s just that I believe every business needs a hedge. It also can be an advantage to be a large player with a preferred manufacturer who wants to keep your business while your secondary player wants to get more of it.

One of the other reasons to think this way, in my opinion, is due to the pace of consolidation in high tech. It’s just part of the everyday play in this market that buyouts are a constant.

The recent desire on the part of Xerox to swallow HP Inc. is a good example. Who knows if it ultimately will come to pass, and as of this writing it looks unlikely. But if it were to happen, then every partner selling HP’s products has some thinking to do. That could mean nothing changes at all or it could be a good thing or a bad thing, depending on your own circumstances. But one thing is certain. You are in a better position if you have alternatives to any supplier.

None of us can conceptualize what may happen in the months and years to come surrounding acquisitions in the market, but we all know they will happen and perhaps at a more rapid pace than they have been. It’s never a bad idea to be thinking and strategizing about what would happen if some of your major suppliers were suddenly in the hands of a different owner.

In many cases, nothing would much change and, in fact, it can often be a positive. Most would argue that Dell’s acquisition of EMC and VMware has been a net positive for all those involved.

But to properly plan for the unknown, it’s best to assume a consolidation is going to offer challenges and ask the questions that make you truly determine if you are prepared for the outcome.

What are the most important suppliers in your portfolio, and how much profit and influence do they provide for your business?

If your top supplier is acquired by a supplier you have worked with and subsequently left because of its approach to working with you, then having a hedge would be critical.

Every supplier has an outlook on channels. Some are totally committed and put major importance on building a go-to-market plan with its channel players.

Others see it as a sideline and, while they play in the channel, they don’t dedicate the resources and commitment necessary to make sure their partner community is as successful as possible.

Most solution providers have done business with suppliers that are not dedicated and they quickly realize it’s a one-way relationship that makes it difficult to bet their business on it.

Over time, most solution providers gravitate to the supplier with not only quality products but those with quality programs and a dedicated commitment to making both sides successful.

We all know the market is always shifting and technology is pushing forward with new opportunities and new approaches to solving end-user problems.

It requires constant evaluation on your part to new products and services to address the customer.

But part of that evaluation also should include developing a hedge and a plan for what may never occur but could mean disruption to your business if it did. A look at your top suppliers and thinking through how vulnerable you are to their consolidation is an exercise worth doing from time to time.

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