Covid-19 and a horrific European conflict have clearly demonstrated the difficulties of business planning in the face of intensely fluid and unpredictable scenarios.
Add the rising pressure to meet climate protection targets set by the Paris Agreement, and it is inevitable that business leaders, including procurement decision makers, have some tough calls to make in the coming months and even years.
Do unprecedented, complex challenges for IT procurement arising from conflict, Covid-19, and climate change require a re-evaluation of IT vendor selection processes?
And what can suppliers do to help?
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Navigating IT Procurement in a Perfect Storm
1. NAVIGATING IT VENDOR SELECTION IN
A PERFECT STORM
IT VENDOR SELECTION DURING CONFLICT, COVID, AND CLIMATE CHANGE
MAY 2022
Do unprecedented, complex challenges for IT procurement arising from conflict,
Covid-19, and climate change require a re-evaluation of IT vendor selection processes?
And what can suppliers do to help?
2. NAVIGATING IT VENDOR SELECTION IN A PERFECT STORM
MAY 2022
WWW.MARKIT.EU 2
CONTENTS
INTRODUCTION 3
CONFLICT & COVID IMPACTS 3
IMPACT OF CLIMATE TARGETS 4
VENDOR SELECTION CRITERIA 4
CARTER’S 10CS OF SUPPLIER EVALUATION 5
MARKIT RESPONSES AND APPROACH 7
WHAT CAN SUPPLIERS DO TO HELP THE SELECTION PROCESS? 8
AT MARKIT WE HELP CLIENTS SUCCEED 8
CONCLUSION: RE-EVALUATING THE IT VENDOR SELECTION PROCESS 9
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NAVIGATING IT VENDOR SELECTION IN A PERFECT STORM
INTRODUCTION
Covid-19 and a horrific European conflict have clearly demonstrated the difficulties of business planning
in the face of intensely fluid and unpredictable scenarios. Add the rising pressure to meet climate pro-
tection targets set by the Paris Agreement, and it is inevitable that business leaders, including procure-
ment decision makers, have some tough calls to make in the coming months and even years.
Procurement decision makers face immediate challenges in 2022 and must be prepared to consider
previously unthinkable scenarios.
Given the growing demand for IT hardware and accessories we predict that vendor selection criteria
may well have to be re-evaluated in numerous companies to ensure optimum agility and IT supply chain
resilience.
There is a significant impact on IT deliveries due to the redirection of rail and air transport on the
Asia-Europe route. Shifting to sea routes will result in increased pile ups and delays in regional ports,
especially in Europe. Sanction restrictions (of products moving to or from Russia) means all such
containers will be inspected, adding further delays.
A surge in ocean freight rates seem inevitable as capacity shrinks, possible war tax risk premiums, and
climbing oil prices push fuel costs higher. Diverted flights due to airspace bans are resulting in price
increases of airfreight.
During the pandemic, in Europe at least, we have seen IT device demand grow and in the case of some
vendors, outstrip supply. With conflict related disruption it is clear some vendors will do better than
others so IT buyers need to be careful with vendor/models they choose. Lack of supply may mean having
to switch, like it or not. At the time of writing, there is no clear evidence that B2B demand for IT hard-
ware and accessories will drop although there are suggestions that B2C demand could fall due to pre-
dicted inflation increases.
One mitigatory factor in the “lack of supply” issue is that some equipment destined for Russia may be
diverted to Europe and help clear some backlogs that have arisen from the pandemic. On the other hand,
Russian companies may turn to Chinese vendors for supply which could impact availability of some
models in Europe.
IT distributors with operations/ heavy exposure in Russia may be affected financially and not able to
meet previously predicted commitments.
CONFLICT & COVID IMPACTS
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IMPACT OF CLIMATE TARGETS
Longer flight routes and inability to use the Trans-Siberian Railway will increase emissions impacts. This
may mean an increase in offsetting and more buying of eco-labelled IT products to mitigate the CO2
emission increases. Reputational management issues related to a company’s climate impact and CSR
goals may become secondary during war, but they are not disappearing completely.
Many IT vendors and resellers may be unable to agree fixed price long term contracts because inevitable
shortage and price increases will mean vendors will not always be able to guarantee prices or delivery
schedules for the longer term.
• Suppliers who are unable to meet agreed terms may default.
• Special prices (aka global bids) may well be threatened.
• Availability may be reduced.
• Due diligence, and especially risk avoidance, will rise in importance.
• Trusted and financially sound IT suppliers will be preferred.
VENDOR SELECTION CRITERIA
Throw into the mix that semi-conductor manufacture requires neon (Ukraine is the world’s largest sup-
plier) and slower manufacture and delivery times of PCs seems inevitable. Let’s not even mention the
potential impacts of disrupted palladium, nickel, platinum, and copper supply chains. In summary, more
disruption lies ahead.
HOW TO FIND THE RIGHT IT PARTNER IN THESE CRAZY TIMES?
Certainly, flexibility in IT sourcing and purchasing approaches will be needed to ensure IT supply chains
are sufficiently agile and resilient.
Professor Leon C. Megginson’s famous quote of 1963, (often attributed
wrongly to Darwin) could resonate at a company, not just species, level -
“It is not the most intellectual of the species that survives; it is not the
strongest that survives; but the species that survives is the one that is
able best to adapt and adjust to the changing environment in which it
finds itself.” Leon C. Megginson
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CARTER’S 10CS OF SUPPLIER EVALUATION
Using the 10Cs can help identify strengths and weaknesses and give buyers information that may help
them negotiate better terms.
Ray Carter first developed his Seven Cs of Supplier Evaluation in
1995.
He later added three more Cs. The 10Cs model, or variants and
derivatives of it, are used by numerous companies to help identify
suitable or preferred suppliers.
Ray Carter
So as an example, let’s look at the 10Cs and some of the associated questions that may be asked of po-
tential suppliers.
1. Competency
• What are their capabilities? Is there any evidence?
• How do they measure up against your needs?
2. Capacity
• How fast can they respond to your needs, and to fluctuations in the supply chain?
• Can they handle your order volumes on top of their existing clients?
• Do they have enough staff, equipment, or other resources to service your needs?
3. Commitment
• Can they provide evidence of their commitment to high quality standards? For example, have they
gained any ISO or Six Sigma accreditations?
• Can they provide an SLA (Service Level Agreement) to guarantee fulfilling your requirements,
whatever the needs of their other clients?
4. Control
• How much control do they have over their policies, processes, procedures, and supply chain?
• What will they do to ensure that they deliver consistently and reliably?
• Do they comply with the General Data Protection Regulation (GDPR), essential in European Union
(EU)?
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5. Cash
• How strong and stable are they financially?
• What evidence can they provide?
6. Cost
• How do the costs compare with other suppliers?
• Are costs transparent?
7. Consistency
• Are they a new innovative company or well established?
• How good is their record of accomplishment?
• Can you test the product or service?
8. Culture
• Do you have matching, or compatible, values and business culture?
• Which stories are public? What does the company say about itself and what do people say about it?
• What are the power, organisational, and control structures in their company?
• Is their behaviour professional and acceptable? What evidence is there of their rituals and routines?
• How are they represented visually? Their offices, clothing, style, and design?
9. Clean
• What is their commitment to sustainability?
• Do they have any green credentials?
• How do they treat their people, partners, suppliers, and community?
• Do they have a reputation for Corporate Social Responsibility, and for doing business in an ethical
manner?
10. Communication
• How will they communicate with you?
• Do they match your preferred channels?
• Who will be your main contact(s)?
• In the event of crisis or supply disruption how fast will they contact you and will you be able to esca-
late issues to a higher level quickly if necessary?
As we see, the 10Cs categories and potential related questions are quite comprehensive and should help
separate the good (suitable for your needs) suppliers from the bad.
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MARKIT RESPONSES AND APPROACH
IT hardware and accessory RFPs (Request for Proposal) often address many of the questions and issues
described above and, without going into detail here, for reference are some of the responses or eviden-
tiary material we might respond with to help with assessment of our bid.
9 Markit Fact Sheet 2022 explains the current company status and broad capabilities and Markit has
twice been a shortlisted finalist in the World Procurement Awards. Markit Client and Partner Suc-
cess Stories are available. Markit verifying saved clients an average of 11.7% in 2021. In 2020, it was
12.5%. 10-15% is a typical range. Markit has shown steady, impressive growth since 2003. Revenue
increased 46% between 2020 and 2021.
9 Markit has an almost unlimited stock availability given its highly scalable marketplace-as-a-supplier
model and the average delivery time for local orders is less than 2 days. Including cross-border deliv-
eries, the average is 3.75 days.
9 The Markit marketplace offers a real-time view of available stocks reflecting international supply
fluctuations. Prices are displayed in real time and for contract clients, Markit charges a transparent
fixed margin on top of the distribution price. There are no hidden or extra charges etc.
9 There is a high percentage of proactive Account Managers at Markit plus clients have direct email,
phone, and chat access to Country managers ad even the CEO to escalate enquiries and issues of
needed.
IS SOMETHING BROKEN IN THE PREVALENT VENDOR SELECTION
MODEL THEORY (AT LEAST FOR COMPLEX IT SECTOR)?
Why is it that the onus falls exclusively on the buying companies to quiz and select the best supplier?
It might seem it should be that way, but as pointed out way back in 1963 in the seminal article Purchas-
ing Must Become Supply Management (Peter Kraljic in Harvard Business Review) developing strong
relationships between buyers and sellers is key to successful procurement outcomes. Kraljic stated,
“Companies that already source on a global basis must learn to cope with uncertainties and supply or
price disruptions on an unprecedented scale. Instead of simply monitoring current developments, man-
agement must learn to make things happen to its own advantage. This calls for nothing less than a total
change of perspective: from purchasing (an operating function) to supply management (a strategic
one).”
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WHAT CAN SUPPLIERS DO TO HELP THE SELECTION PROCESS?
Given strategic partnerships and supply management are the way forward to solving immediate, ongo-
ing, and unknown future problems for multinational IT buyers then what should the role of the supplier
be? Should they be passive, answering 10C-type questions in RFPs or can they do something more proac-
tive, more helpful?
How should, for example, IT suppliers (current or potential) act to develop a positive strategic relation-
ship and optimally serve the client?
Easily said but what does it really mean?
8 It is not about selling products.
9 It is about listening carefully, with genuine empathy.
9 It is about understanding deeply.
9 It is about acting professionally, ethically, and in our clients’ best interests. Always.
9 It is about learning and accepting the complex IT procurement challenges and goals of multinational
companies, and then, and only then, can we propose exact solutions and frameworks that can stand
the test of time.
Solutions that can consistently deliver time and money savings – like we do already, for thousands of
companies across 5 continents.
More formally we can say buyer/seller relationships are often fundamentally broken.
Facing facts is important.
• Many buyers simply just do not trust sellers anymore.
• Salespeople need to “hit numbers” and care less about finding solutions than exactly satisfy the
needs of their clients.
What happens? Missed sales targets and awkward relationships, leading to disloyal clients.
This is counter intuitive because, if you really think about it, buyers and sellers really do want the same
thing - a sustainable solution that meets their diverse clients’ needs.
AT MARKIT: WE HELP CLIENTS SUCCEED
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Helping Clients Succeed (HCS) is about helping clients solve their problems.
Markit has shown since 2003 that HCS is a successful framework/methodology
that combines critical communication and analysis skills, empathy, disciplined
business thinking, and professional execution.
These “assets” enable our Markiteers to do what needs to be done.
In 2021 - 2022 hundreds of European/international companies, including many well-known multination-
als, switched to Markit to buy their IT devices for the very reasons that we can provide a real-time view
of available stock, competitive pricing, and shorter-than-average lead times ... and because we listen,
care, and, if we are the right partner (do we have the relevant, matching skillsets and resources?), then
we can deliver an exact solution within a mutually beneficial, and sustainable, relationship.
Yes, we sell IT hardware and accessories through our operations in 38 countries but more importantly,
we help our clients succeed in saving time and money on their IT procurement challenges, and, at the
end of the day, that is what matters most for Markiteers.
CONCLUSION: RE-EVALUATING THE IT VENDOR SELECTION
PROCESS
We expect to see even more hybrid procurement (the trend has started). RFPs will continue of course but
given the uncertainties surrounding availability and price stability more companies will combine tradi-
tional tenders with buying from marketplaces that can display real time pricing and availability.
In addition, we see supplier helpful proactivity rising in importance plus a rise in the weighting given to
established suppliers, with demonstrably successful track records and a sound financial footing.
Risk avoidance and supplier flexibility are becoming the keywords in IT hardware and accessory procure-
ment.
Read more IT Procurement thought pieces and white papers from Markit.