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Another Vendor Going Out of Business

by Jose Jimenez

February 15, 2022

There are times that you need to put a vendor out of business, which means leaving a vendor to get products from someone else. There can be various reasons why you need to put a vendor out of business, like the vendor not delivering on time, the vendors not following certain rules of your company, or you have evolved out of your vendors.

The following article highlights how you can lay off a vendor easily and the things you need to consider before doing so. Putting certain vendors out of business is very necessary; otherwise, you can suffer losses that can be difficult to pay off.

Get involved before signing contracts

Before you lay off a vendor from their work, it is important to know whether or not you have some other ways of making them aware of their poor performance. You can check to see if they have a website or an online community. This also goes for the vendors you are aiming to keep in the loop after putting your existing vendor out of business. You need to get involved with new suppliers after putting the existing ones out of business so that you have a variety of vendors to choose from.

Gaining real hands-on experience is very necessary to know more about the vendor, the service and the goods they provide, and their feasibility for your business. Before getting new people to contribute to your business, you must get to know them; otherwise, you may experience regret for not choosing well while being misinformed due to third-party opinion. Once you choose a new vendor and lay off the old one, there is no going back for a while.
Think of long term business plans

Some vendors might be performing poorly due to a clash of opinions. What does that mean? It means that they might not be the right choice for you anymore, as you have evolved as a business. If you were initially a small business and have now been acquired by a larger company or have outgrown your initial need for produce and products, you cannot keep on working with the same supplier.

Due to this, you might now need a bigger supplier who is a part of a conglomerate and can provide you with bulk materials. So, you are expected to go with a new supplier, who can fulfill these needs, and fulfill them on time. There can be times when you cannot deal with the supplier’s increasing product costs because they are outgrowing you. In such a case, too, you need to take care of supplier migration.

Check your vendor management chain

You need to inform the top brass about the change. Just because you have made the decision to change the vendor doesn’t mean the decision will always get approved. There are various formalities that need to be done before putting a certain vendor out of business, which can only be taken care of after you have received permission from the higher-ups. For example, you need to inform the head of sales that a certain vendor isn’t delivering on time and needs to be immediately replaced due to the losses they are causing to the business.

There can be times when things go wrong. In such cases, if you have informed the management regarding the decision, you don’t need to worry about the technicalities; your company’s lawyers will take care of the necessary work. Sometimes, vendors understand why they are being replaced, but there can be times when a huge ruckus is caused. To curb this, proper communication in the company is required.

How easily can you migrate

The ease of migration is a major factor that plays a role in the vendor replacement process. You need to know how easily you can switch the places from where you acquire your products, how long the lag time is (lag time refers to the time it takes the product to come to you from the supplier), and what is the drop in the product quality (if any). After making these decisions, you can safely migrate from one vendor to the other.

You also need to note how well these vendors can be incorporated into your company. A certain vendor might be giving you trouble due to their attitude, but would be performing well in the company, so replacing them won’t be as feasible. There are various such factors to consider before migrating to a better vendor.


In conclusion, these are the things you need to consider before replacing a vendor with a new one. Replacing vendors is a drastic measure you take if no other option is working. Hopefully, this article helped to resolve the trouble you are facing in your company regarding vendors, vendor replacement, and any such related issues.