When Less is More: A 5-Step Approach to Vendor Consolidation
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When Less is More: A 5-Step Approach to Vendor Consolidation

When Less is More: A 5-Step Approach to Vendor Consolidation


At some stage, most global companies reach a point when they find that too many localization vendors render consistency, cost-control and effective program management difficult. But how can you get stakeholders to agree on which vendors to retain when they may have their own personal favorites? Following our earlier post about the reasons why global companies consolidate, here are our observations about how organizations approach vendor consolidation.

1. Identify Needs

Interview stakeholders to get a full picture of what your organization needs. One team may prioritize agile turnaround, while another may require linguists with specific subject matter expertise. Your consolidated vendor model must cover all of these needs, preferably with more than one option.

While you’re talking to stakeholders, ask about their experiences with current vendors. Which ones do they use, and why? Which ones do they not use, and why not? How fresh is their information? How do they feel about their current options — are there any new vendors they’d like to consider once the organization has consolidated buying power?

2. Research Localization Vendors

Develop a spreadsheet of your organization’s requirements, with columns for each vendor, and do your best to indicate which vendors meet which requirements. Vendor websites will often deliver many basic facts on services offered and regional coverage without a formal request for information (RFI).

Be sure your spreadsheet includes a tally of the stakeholder’s positive and negative experiences for each vendor, along with detailed comments — perhaps on a separate worksheet.

3. Form a Team

Select a team of stakeholders whose combined priorities represent the priorities of the larger group. You want passionate yet reasonable, collaborative people who will contribute actively to ensure their own needs are covered. Their diligence and advocacy will help sell the new consolidation plan to other stakeholders.

4. Develop a Short List

Task the team with narrowing down your current list by an arbitrary number, say, by half, and remind them of the ultimate goal to consolidate down to normally three or four vendors at most. Serve as facilitator as the team develops objective criteria for excluding vendors from consideration, such as meeting at least 50 percent of the organization’s requirements, without more than a certain number of recent negative experiences.

This process will likely generate discussion about:

  • New requirements that stakeholders failed to articulate in the original process.
  • “Requirements” that might actually be “strong preferences.”
  • Significant “unknowns” that require deeper research before a vendor should be excluded.

Be sure you document these discussions and get the team to sign-off on key changes.

If most current vendors fail to cover enough of the combined requirements, you may need to add other vendors to the list, and research those new vendors accordingly. Most stakeholders will be reluctant to abandon their favorite vendors, but they’ll find it easier if they have a voice in developing and applying objective criteria together with their peers. 

5. Evaluate Remaining Vendors

Once the team has reduced the list, you should have a clear sense of the concrete requirements, the strong preferences, and the knowledge gaps that require deeper research. Invite the remaining vendors to participate in a request for information (RFI) to get more details on all of the above, as well as a few standard criteria such as these. 

  • Quality. Is the work product good? Assuming you have metrics around quality, you should only pursue continued relationships with those that hit your quality standards in translation accuracy and file delivery.
  • Customer service. Is the vendor team responsive and detail oriented? Quick to resolve issues? You should feel confident in each vendor’s project managers as competent professionals who actively strive to support your goals.
  • Partnership. Is the vendor asking for a deeper relationship, or treating your program like a transaction? You want true business partners with whom you can build joint innovation programs to reduce costs, increase turnaround time and improve quality over time.
  • Service range. Localization programs require more types of services to reach increasing in-market goals. As you outsource more globalization activities over time, your vendor should be able to expand your program to include new services.
  • Innovation. As your maturing program becomes more complex, the industry is evolving new ways to solve common challenges. Is your vendor noticing your challenges and bringing you new ideas to address them? Look for a vendor that handles programs for other companies with similar requirements: cross-pollination of innovation will raise all boats and increase the likelihood of your vendor’s co-investment.
  • Scalability. Lastly, is the vendor organization big enough to handle growing volumes? Do they cover all or a large portion of the languages and markets you intend to target?
  • NOT pricing. Localization pricing reflects so many variables that the likelihood of making apples-to-apples comparisons during an RFI process is low. Let pricing be a consideration in the request for proposals — and even then, keep in mind that tens of thousands of dollars in difference between two proposals may amount to pennies per unit of goods sold — which may be a small price to pay for a significant improvement in performance.

Your evaluation should produce a short list of vendors who satisfy all of your requirements. There’s no set rule on how many vendors to engage, but each additional vendor splits the buying power, so target 2-4 if you can. Some organizations embrace single-sourcing for even greater buying power.

Consolidating your vendors is a complex and time-consuming process that may take weeks or often months. Keep your stakeholders engaged by reminding them of the improved buying power and higher-priority attention their individual programs will get with larger volumes for each vendor.

Finally, don’t burn your bridges. While some of the existing providers may not get shortlisted or selected, bear in mind that companies develop and grow their capabilities all the time. Keep the door open to re-evaluate and re-introduce them later as needed.

Be sure to tune in next week for the third installment of our blog series on vendor consolidation: managing transitions and implementing program-wide control.