Vendor management entails strengthening the relationship between suppliers and service providers to eventually enhance business outreach. Also, it is not just about negotiation but constantly working with vendors to come to agreements that would mutually benefit both types of companies. And, a well-executed vendor management program not just manages vendors’ sourcing and researching but supports obtaining quotes, manage turnaround times, documenting contracts to ensure seamless relationship management, performance evaluation, and more.
Today, you will be hard-pressed to find a company that does not have a vendor for something. Perhaps for logistics or maybe for IT development, but most modern businesses rely on third-party service providers for something the other, which has led to an increased focus on better vendor management and how companies that rely on such vendor services can glean better value from their vendors.
Much like other aspects of business, vendor management necessitates careful analysis and ace strategy to deliver the results the company desires. So, here are some vendor management strategies and tips to help you achieve the best possible results from your vendor.
1. Get a better idea about your vendor’s business: When you decide to work with a third party, it is not important to just understand your business requirements. While that is crucial, of course, it is also important to understand the vendor’s business. Why? Because it will allow you to determine the scope for cost-cutting, if at all, knowledge improvement, etc. that will, then, enable the vendor to serve your business better. This will, consequently, not only translate into benefits and profits for your business but also help you foster a better relationship with the vendor.
2. Communication is key: Any efforts to work together fail without seamless communication. For good vendor management, make sure information is shared with vendors regularly and in a timely fashion. To achieve this experts recommend setting up communication schedules and protocols to help set up a rhythm for robust communication with the vendor.
3. Find the right balance between commitment and competition: To streamline your vendor management, an important task is striking the right balance between commitment to a vendor, while also ensuring one does not simply comply with any unreasonable prices and deliverables the vendor may quote. What we are saying is though it is important to remain committed to vendors that successfully fulfill your requirements, it is also vital to make sure that the vendor is not misusing this commitment to quote unfair prices, not deliver quality services, etc. Hence, gather at least a handful of bids before picking a vendor.
4. Foster long-term partnerships: A crucial part of the efforts to achieve the best possible value out of one’s vendor management is nurturing long-term relationships with vendors. This is because while short-term associations may offer minimal cost-related benefits, the fact remains that continually switching between vendors only ends up costing the organization more in the long run and also takes a toll on the quality of products and services. Plus, the cost of hiring a new vendor in the middle of a process can prove to be quite expensive.
Experts all over the world acknowledge and agree that establishing and fostering robust equations with one’s vendors is a critical part of not only the business’ performance but also the company’s overall growth. Unfortunately, the endeavor to establish such a relationship can be complex, leading to companies struggling to glean the best value out of even their main vendors. To avoid such a situation, it is important to keep best practices such as the ones listed above in mind. In addition to that, a proper vendor management solution is also the key to making sure that your vendors deliver the best possible value for your business.