Why Your Vendor Vetting Process Is Probably Still Stuck in 2020

If your vendor vetting process hasn't changed since 2020, you're almost certainly leaving money and reliability on the table. That's not a criticism—it's a pattern I've seen across three companies and about 80 orders annually since I took over purchasing. The industry has moved, but our checklists haven't.

I manage procurement for a mid-sized energy services firm. Roughly $300K annually across maybe 8-10 vendors for everything from drill components to facility maintenance. When I started in 2020, the process was straightforward: get three quotes, pick the cheapest that meets specs. But after a few painful experiences, I've changed my mind.

The Old Rulebook Doesn't Fit

Back in 2020, the equation was simpler. Supply chains were stable. Lead times were predictable. The biggest risk was paying 10% more than you needed to. But the landscape shifted, and I learned the hard way that what was "best practice" then can actually hurt you now.

Take our 2024 vendor consolidation project. I thought I was being smart: reducing our vendor count from 12 to 5, consolidating orders, getting volume discounts. But one of the new vendors—a supplier of specialized seals—couldn't handle the volume ramp. They promised 2-week lead times but delivered in 6 (if I remember correctly, it was more like 8 for the first batch). The cost of those delays: about $4,000 in expedited shipping and downtime (ugh).

The old checklist wouldn't have flagged that. The vendor had good pricing. Their samples were fine. The issue was scalability—a factor we hadn't needed to worry about pre-2022.

Here's my point: the fundamentals haven't changed—quality, reliability, compliance—but the execution has. You still need those things, but you need to verify them differently now.

Three Specific Changes I'd Make to Your Vetting Process

1. Test Capacity, Not Just Samples

Samples prove a vendor can make one good unit. They don't prove they can make 100 good units on a deadline. In Q3 2024, we tested four potential vendors for a routine order of 200 units. All four sent excellent samples. Only two could handle the order volume within our timeline (Source: internal vendor audit, September 2024).

That's not surprising if you think about it. But how many RFPs actually include a capacity check? Very few in my experience.

What I mean is: ask for references from clients placing orders of a similar or larger size. Follow up. Ask about the vendor's response to surges. Don't just tick a box.

2. Verify Invoicing and Compliance Capability

I once found a vendor offering a component at $200 less per unit than our regular supplier. Great deal, right? Well, they couldn't provide a proper invoice—just a handwritten receipt. Our finance team rejected the expense. The net loss after rush-ordering from the original supplier: about $1,200 out of my department budget (note to self: never skip this step again).

Regulatory compliance is another overlooked area. For our industry, proper documentation is non-negotiable. A vendor might be technically capable but unable to provide the certifications we need for audits. Per the Energy Equipment Directive (effective 2023), we need proof of material traceability. A vendor who can't provide that? No deal, regardless of price.

3. Build Relationship Redundancy

Relying on one vendor for a critical component is a risk. But so is over-fragmentation. The balance is having 2-3 qualified options for each critical category. In our 2024 review, I found we were single-sourced on three key items. When one vendor had a factory shutdown (unfortunately, it happened), we were stuck.

I've only worked with domestic vendors, so I can't speak to international sourcing. But the principle holds: vet at least two vendors for anything that could shut down an operation. Keep them warm with small orders. Test their responsiveness.

But Isn't This Just More Work?

I can hear the pushback: "This sounds like tripling the procurement workload for minimal gain." And I get it. When I first heard this advice, I thought the same thing. My experience is based on processing about 60-80 orders annually. If you're working with different volumes or types, your experience might differ.

But here's the thing: the upfront work pays for itself. That capacity test I mentioned? It saved us from a potential $10,000+ production delay. The invoice check that cost me $1,200? That was a cheap lesson I only had to learn once.

The reality is, vendor vetting has become less about checking boxes and more about understanding capability curves. It's not harder—just different. And yes, it requires more thought up front. But the alternative—learning these lessons the hard way—is worse.

So, revisit your checklist. Challenge the assumptions you set in 2020. The industry has evolved, and good procurement practices need to evolve with it.

Prices referenced based on internal vendor quotes collected between Q3 and Q4 2024. Verify current pricing with suppliers as market conditions may have changed.