How non-standard suppliers are hurting your bottom line

Imagine this scenario:

You manage procurement for an enterprise company and pride yourself on staying within budget. Yet, over the past year, your expenses have unexpectedly increased, and you’re struggling to pin down the cause.

Upon investigating, you discover employees — including front-line managers looking for quick solutions and procurement managers seeking cost savings — are bypassing your approved vendors in favor of popular online retailers.

While these platforms offer convenience and seemingly competitive pricing, they result in unpredictable subscription fees, volatile pricing and a complete lack of visibility into where your money is really going.

This situation is all too common across organizations trying to manage procurement effectively. In fact, 55% of U.S. companies reported an increase in procurement spending due to non-compliant purchasing.¹

While non-standard suppliers often appear convenient, the hidden costs and inefficiencies they create can significantly impact your budget, compliance and overall operations.

Let’s take a closer look at why consolidating your suppliers and aligning with strategic procurement policies can save money, time and headaches.

Three tough procurement challenges

Irregular pricing

Compliance gaps

Lack of spend visibility

The risks of non-standard suppliers

At first glance, allowing your front-end managers to use popular online retailers might seem like the perfect solution. These platforms typically provide access to a wide range of products, quick shipping options and seemingly competitive pricing.

However, beneath the surface lie significant risks that may ultimately hurt your organization.

Pricing Volatility

One of the biggest challenges with non-standard suppliers is their reliance on dynamic pricing models. This means prices fluctuate based on demand, creating unpredictability that can derail your budget.

The odds are strong that your front-end users are not tracking these dynamic prices; most of them are probably not even aware of such practices. So, to illustrate, here are some recent, real-world price differences from a popular online (and non-standard) retailer.

Real-world pricing variations you typically see with non-standard suppliers and dynamic pricing²

Office furniture

Breakroom supplies

It’s important to note that we didn’t cherry-pick these few examples just to make our point. There are thousands of products with price fluctuations like these from nonstandard suppliers. The risk of paying prices that could potentially be marked up 150%-200% should be all the justification a smart procurement director needs to limit purchases from non-standard suppliers.

The better solution? Work with suppliers who offer stable, negotiated pricing. This not only reduces financial risks but also makes forecasting and budgeting more reliable.