negotiation Jul 12, 2016
Some procurement professionals say it’s unethical to allow a vendor to pay for a meal or entertainment/sporting event as it may be construed as buying favor (a bribe). I think taking a hard line on this limits the opportunity to build relationships with prospective vendors.
A better approach is to define a clear policy of reciprocation from the beginning with all vendors. For example, if your team will be visiting a prospective vendor’s site, allow them to treat your team to dinner only if they agree to you treating their team to dinner when they visit your location. If each vendor has this opportunity, they gain no advantage or favor.
By doing this, you will create an opportunity to build relationships that will help you evaluate the people in each company. More importantly, I have found from experience that these relationships will grow and become the foundation for success later in the relationship. When things get rough, you need to be able to pick up the phone and call someone at a vendor for help in resolving the situation. It sure helps if you have met that person and spent some time getting to know them.
One of my best personal examples of this is a vendor's account manager that I had gotten to know during the vendor selection process called me 6 months into the relationship in a panic saying he was about to lose his job due to an unresolved issue that was growing in severity. He had been trying to resolve the issue through the proper channels for months and wasn't getting any traction. I wasn't aware of the issue since it related to a different department. I immediately escalated the issue to the executive-level and we were able to resolve the issue in a matter of days.
Fast-forward about a year later and one of our other vendors had made a major mistake in our Q4 that required a fire drill to resolve or it would have caused the company to miss sales and profitability targets in a big way. The resolution required the help of the other vendor mentioned previously. I called the same account manager and he pulled a lot of strings within his company to help us resolve the issue caused by the other vendor. Acting quickly enabled us to eliminate the issue entirely with no impact to our Q4 results.
In both cases the resolution would not have been as quick if I hadn't spent time building relationships with the account manager during the selection process. That is why I am an advocate of enabling both sides (buyer and seller) to mutually invest in relationship-building activities during the vendor selection process. As long as it's an equal investment from the buyer and vendor and offered to all vendors competing for the business, the buyer won't be crossing any ethical lines by allowing a specific vendor to buy favor.