Your Guide to A Successful Vendor Management
A positive relationship between employees and employers foster mutual growth and respect. But this approach not only applies to your employees, but for your vendors too. Because the vendors you work with have a major impact on your company’s capabilities, and growth, it is important to ensure that you have a positive strategy in place to build and manage your vendor relationships.
How to find the right vendors
Vendors play a crucial part in defining your business. Therefore, you need to have a process in place to ensure that you engage with them at every step of the way. Although there are many steps that go into creating an effective vendor management strategy, the below steps will touch upon some of the broader steps that will help you find and retain the right vendors:
Step 1: Research
Conduct a thorough research and build a list of vendors that you feel are right for the task at hand.
Step 2: Shortlist
From the existing list, shortlist candidates based on their capability, pricing, quality and work history.
Step 3: Negotiate
Once you shortlist vendors, get in touch with them, conduct a negotiation, and verify their references. Your negotiation should address the various aspects of your project such as budget, deadline, goals, etc.
Step 4: Contract
It is important to devise a contract and have the vendor sign it and return it to you before onboarding. Ensure that all the tax forms like W9 and other important documents are signed and returned to you.
Step 5: Assign tasks
Once the vendors are onboarded, you can start assigning tasks and evaluate their performance to ensure that they play by the rules while working with you. Evaluations help you learn more about the vendor’s capabilities so you can later use him to carry out specific tasks when need arises.
Step 6: Manage
Once you have vendors working for you, it is important to manage and deploy them when necessary. Although you may not use all the vendors at all times, you must reach out to them and build a connection so that if one of your vendors is not able to carry out a particular task, you have back up vendors to fill in.
Why is it important to have a strategy for vendor management?
Devising a vendor management strategy will allow you to manage all your vendor activities so that you can streamline processes and ensure improved efficiency and long-term growth for both your business as well as for the vendor.
- A well-devised vendor management strategy will help you find & retain the right talent and build larger talent pools for you to choose from.
- Working with a vendor involves a ton of documentation. When you strategize how you document files and ensure legal compliance, you can make informed decisions without breaking the law.
- You can measure performance of each vendor and retain the best talents so that your company does not suffer when it comes to quality of work.
- You can improve efficiency and brand value when you strategize and streamline how you manage your vendors.
What happens if you don’t have a vendor management strategy in place?
Vendor management strategies are important to ensure smooth workflows in your organization.
Without it, you will have a tough time managing work, staying compliant, and ensuring timely deliveries. Let’s explore some of the problems that you might face if you do not have a vendor management strategy in place:
- If you are working with a vendor you need to ensure that you get the most value for the money. This involves connecting with the vendor, keeping them engaged, and assigning them tasks routinely. This is important and easy when you have a vendor management strategy in place.
- The performance of your vendors affects your company’s overall performance and delivery. Therefore it is important to have an integrated view of your vendor’s performance so you can retain the good vendor and eliminate the ones who don’t align with your business structure. Vendor management strategy offers you a comprehensive view of all your vendors, their performance levels, duration taken to complete a task and other important information that simplifies and finetunes your vendor selection and deployment.
- When you work with multiple vendors, you will have to manage a mountain of paper works and contracts. If you do not have a vendor strategy, you will not be able to keep track of important paperwork like tax documents. A vendor management strategy ensures that you fulfill your legal obligations on time and offer better decision making capabilities.
How to devise a successful vendor management strategy?
- When you are working with a vendor, align your priorities and provide him access to information he needs. Include him in your business processes and offer enough information that will allow him to plan out his work and do his job better.
- Offer insights and training on products or services they work with. Having a well-versed vendor is crucial to ensure your business success. Therefore, empower your vendor to gain a competitive edge.
- Always retain good vendors and stay connected with them. Skipping through vendors after vendors will cost your company time and money. Having reliable vendors who know what they need to do will save so much time and effort in achieving your goal.
- Focus more on quality than cost. Many companies settle for the cheapest vendor in the market to cut costs. But oftentimes, they end up compromising the quality of their work and delay in delivery when time is of the essence. Always work with quality vendors even if it means you have to shell out a free extra bucks.
Whether you’re managing a few vendors or several hundreds of them, having a well-executed vendor management strategy will help you track, manage, and simplify your vendors effortlessly. Remember, vendors are important for your business growth and retaining them will help you accomplish your company’s strategic and tactical business goals.