Shrinking preferred supplier lists and growing brands

We seem to be entering a new stage in the evolution of the preferred supplier list.

In its first guise – let’s call it Ardipithecus Ramidus, after the most primitive hominid yet found by palaeontologists – the PSL was a sad and solitary figure, wandering the corporate plains. It had little intelligence, preferring to bludgeon middle managers who had the temerity to choose consulting firms not on the PSL. In many organisations, Ardipithecus Ramidus has been replaced by Homo Habilis, a much more attractive beast capable of using simple tools. As a result we’ve seen the rise of “Tier Two” PSLs, aimed at identifying small and mid-sized firms with deep expertise in some areas, but which don’t have the brand or global coverage of “Tier One” firms on conventional PSLs.

Now something new has emerged from the procurement jungle (Homo Sapiens?). Standing taller, thinking more deeply, this figure knows that blunt instruments are a thing of the past. Having put a Tier Two PSL in place, it recognises that it doesn’t have to have every big, global brand on its Tier One list but can pick and choose between the major players as well.

This raises the stakes for consulting firms. Up to this point, those in Tier One have had a fairly comfortable time; attention has instead been focused on movements between the very bottom of Tier One and the top of Tier Two, as firms there jockey for position. But the new generation of PSL removes Tier One firms’ automatic right of inclusion.

That’s why our recent report on brand associations is so important. The fact that, in a survey of procurement people in almost 60 major organisations, IBM is the firm most closely with IT consulting, Accenture with programme management, McKinsey with strategy and PwC with M&A-related consulting all suggests that these firms will continue to be on everyone’s lists. But what about the firms which came third of fourth: what happens to them?

Far from resting on their marketing laurels, Tier One firms face a new challenge.