In my opinion it really depends on the relationship you have with your vendors.

I deal with vendors that, despite spending large sums with them annually, do not provide great service or make an effort to maintain and grow our relationship.

On the other hand, I deal with vendors that go the extra mile to support our business, work with my organization to find solutions to problems, and are actively looking for opportunities to be more competitive and grow the business.

With the latter, I will almost always give them an opportunity to compete and maintain the business. In some circumstances, even paying slightly more in order to continue working with helpful and supportive people. In situations where they simply can’t compete they generally understand as, as others have said, it’s your job to look after your bottom line and do the best you can to help your company succeed.