Simple Steps to Successful Vendor Management

Vendor management is quickly becoming a focal point for businesses, but when dispersed teams are involved, communication and coordination challenges often arise. Manage this relationship more efficiently with a few simple steps.

Simple Steps to Successful Vendor Management

More than ever, organizations are looking at ways to streamline the vendor management process. But before it can be simplified, a few things need to be addressed. Vendor management is more than measuring performance through SLAs and KPIs. There are also intangible aspects of this business relationship that need to be recognized and accounted for, such as the commitment and flexibility the vendor has towards the organization. It’s imperative for both organizations to set expectations and priorities for that engagement up front to ensure understanding on both sides.

Make Everything a Project

Vendor management should be treated like any other project, with steps such as adopting the PMO’s processes and procedures and applying those towards the business of vendor management. This gives dispersed teams a clear direction on how to manage the vendor relationship.

For example, most projects would include a detailed risk analysis. In the case of vendor management, that analysis should include identifying and analyzing risks such as what would happen if there was a decision to drop the vendor contract. What would the mitigation strategy be?

Part of managing projects is monitoring, and quality assurance is an aspect of vendor management. Businesses need to be able to measure and monitor the vendor’s performance. For vendor management, the business will need to determine what measurable performance expectations are required to verify the quality of the service. How many site visits are expected? What about key resource interviews? Having the necessary performance criteria defined at the start of the business relationship sets the expectations as to what will be deemed a successful project.

It’s vital to assess the quality of the contract to create a win-win situation. Strengthening a relationship with a vendor is not about getting the lowest price – it’s about building a business relationship that will go the distance. Ask if the vendor will appropriately prioritize your company or contract, and determine if that amount of attention is appropriate for your business needs.

The legal necessities should be based first on the above, and then should expand into outlining the fine print details. This ensures that all parties are in agreement, protected and committed to mutual success.

Build Towards Collaboration

Take the time to build collaboration with the vendor through accountability, communication and standardization. This can be achieved through the following actions:

  • Formalize the SLA Review Sessions
    Formalize these discussions to evolve around the documented output of KPIs and deliverables, which should be revisited at a predetermined, agreed upon timeframe (daily/weekly/monthly). Review the results (both positive or negative) and use them as a basis for outlining future goals.
  • Set Expectations
    Define your expectations and ensure that they are documented, acknowledged by the vendor and reviewed regularly. Clearly defined and communicated expectations help to avoid potential disputes and give an opportunity for both parties to re-align their efforts. In some cases, a vendor will sell a solution and then delegate to a leased resource. Often the consistency of resources is overlooked, but it shouldn’t be. Be sure to get everything in writing to gain a clear understanding of who will be working on your project.
  • Prioritize Reviews
    Conduct vendor management reviews within the business. Engaging in regular and frequent reviews ensures that both parties have an opportunity to express their needs and convey whether or not those needs have been met.

Simplifying vendor management by taking a project management approach sets the process and procedures on how to work with your vendors. It helps both parties build and strengthen the business relationship by coming to agreements that will satisfy both parties, ensuring long-term success.

Find out why VIMRO is more than just another outsourced IT provider here>>

Share this post: