Customer, Preferred

The status of a customer when their supplier affords them privileges not widely available to other customers. Traditional purchasing concepts are predicated on the idea that suppliers are disposable and that it is the supplier’s privilege to receive orders from the customer. For example, the invitation of three bids assumes that there are three acceptable bidders, and the label ‘vendor’ assigns a common classification to all suppliers, irrespective of their significance to the buyer’s business. In markets where there are few suppliers, or where the balance of power lies with the suppliers, buyers may adopt an approach of projecting their organisation as a preferred customer. Simple procurement and contracting processes, on time payment, clear documentation, the avoidance of unduly onerous terms and conditions, ethical behaviour and transparent processes may help differentiate the buyer’s organisation from other buyers. The buyer is seeking preferential treatment, such as access to research and development, intellectual property, white papers or technology road maps, delayed implementation of price increases, avoidance of allocation rationing in times of shortage and preferential pricing. See also Allocation, Cost to Serve and Partner.