The People and Processes of Vendor Management Services

Vendors are made up of the businesses and individuals that provide goods and services to organizations. Companies could work with several vendors; they are not limited to just one. These vendors probably all have variations in regards to their contract terms, pay rates, and other important details, which has the potential to become complex and messy. When this happens, it is probably time to consider hiring a company that specializes in vendor management services. Keep reading to discover a definition of vendor management, a breakdown of the process involved, and tips on how to build lasting relationships with your vendors.

What are vendor management services?

A common misconception is that vendor management is only comprised of one essential component: finding a supplier with the cheapest price for whatever you are purchasing. In reality, it is so much more than that. Vendor management is used to describe the following:

• Researching and sourcing vendors
• Getting quotes with clear pricing, capabilities, turnaround times, and quality of work
• Negotiating contracts
• Managing relationships
• Assigning jobs
• Evaluating performance
• Making a payment

Clearly, vendor management is not a quick and easy thing. It requires skills, time, and resources that your business may not have. The entire goal of vendor management is to streamline the process to give your business maximum efficiency.

The Four-Part Process

Usually, vendor management is divided into four separate steps, as outlined below.

1. Establish your business goals – When you establish clear performance parameters, it makes the process of selecting and managing your vendors much simpler. It allows you to be able to compare and contrast goals with vendors to determine whether or not they will be a good fit for your company.

2. Select your vendors – Picking out the right vendor, as mentioned previously, will be dependent upon whether or not their goals align with your own. Just as any firm does, vendors will have both strengths and weaknesses that you should be aware of. Carefully going over each one’s pros and cons and subsequently choosing the one that best suits your business is critical during this step.

3. Manage your vendors – A company that provides vendor management services should manage your vendor by monitoring performance and output, approving or disproving changes,  ensuring contract terms are being followed, providing feedback, and developing relationships. This should be done in a way that includes effective communication, integrity, and honesty to keep both parties (also known as your business and the vendor) satisfied.

4. Evaluate your performance – This portion of vendor management revolves around meeting goals. To ensure profitability, it is essential to continuously check on whether or not performance objectives are being met. It is also important to note that goal completions should be occurring consistently.

Building Positive Relationships with the People

To fully take advantage of your vendor management process, it is vital that you build and maintain positive relationships with your vendors. Good suppliers, including those in the tech field, are hard to come by. Therefore, nurturing your existing relationships with your vendors is important if you plan on keeping them around. Some good tips on maintaining positive relationships with your suppliers are listed here:

• Communicate with your vendors – When there is bad communication between a business and their supplier, something is bound to go wrong. Your vendors cannot complete tasks if they are missing important information or are unaware of your priorities. Sharing information and your priorities in a timely manner gives your supplier the chance to meet your needs to the best of their ability. Some relevant information that you might share with them includes things like deadlines, changes in design, forecasts, and more.

• Work with your vendors on strategy – Collaborating with your vendor about strategy makes your investment in them well worth it. For example, letting them come to meetings that are relevant to whatever they are providing your business with can give them insight about how to further innovate their product, processes, or other things of that nature. Doing this can give your organization a competitive edge.

• Be future-oriented – Short-lived vendor relationships give you short-lived profits and minimal savings. If you are seeking value, it is best to look forward and build strong relationships for the long-term. This allows for trust and commitment from your vendors and could even score your business some handy perks. These could include discounts, preferential treatment, and more.

• Focus on agreements that benefit both parties – When negotiating, be sure to consider the needs of your vendors. Using aggressive negotiation tactics makes relationship building difficult and could even lead to resentment, which could cause greater issues as time goes on. Instead, try to come to agreements that satisfy both you and your vendor so you can both walk away feeling good about the deal.

As previously stated, vendor management can be a huge undertaking. If your company lacks the skills, time, or resources to successfully manage the people and processes involved, it may be time to consider outsourcing the job to a third-party firm that specializes in vendor management services. Here at Contigo Technology, our clients allow us to engage with their technology vendors to keep their services running smoothly. This includes ensuring upgrades are scoped and completed, remedying any ISP outages, and fixing application glitches. Contact us to get started on understanding and improving the many components of vendor management for your business today.