What is Vendor Management and How To Succeed When Dealing With Them

Some new businesses are not familiar what is vendor management. It is a process that enables a company to take appropriate actions to control costs, negotiate contracts, minimize potential vendor-related risks, ensure high quality service deliverability, and receive long-term value from vendors in the long haul. It involves finding the best suitable vendors, determining pricing information, evaluating work quality, managing multiple vendors at once, complying to organization’s standards, and ensuring that the payments are fulfilled regularly.

Businesses that use IT products and services provided by external organizations are called vendors. A vendor can be a sole person or a firm, and they can also be referred to as a supplier or service provider. Some businesses have a few vendors only while some hire many. All of which have different terms and conditions.


What is Vendor Management

Vendor management related activities and the level of management required for each vendor are always unique. They often depend on the characteristics of the vendor and what products and services it supplies. In order for it to be efficient, vendor management requires specific skills, time, and sufficient resources.

To make a lasting relationship with vendors, you have to constantly observe several best practices that will benefit both companies.

Communicate Information and Priorities

One way to succeed in vendor management is to maintain an open line of communication. Appropriate information and priorities should be shared with your vendors to allow them to serve your needs better. The data you must share includes limited forecast information, new product launches, changes in design, and expansion or relocation changes.

Find Balance Between Commitment and Competition

A vendor will be pleased to assist and support the operations of your business if you show them your commitment. However, it does not automatically mean that you should just accept the prices they provide. See to it that you get competitive bids.

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Work With Key Vendors to Strategize

If you have a vendor that regularly supplies a part or service to your company, ask that vendor to have strategic meetings with you regarding the product they work with. Since you brought in the vendor because of their quality of work, they are sure to be experts in that area. Take advantage of their expertise to improve your processes.

Build Long-term Partnerships

When you build long-term relationships with your vendors, you can benefit from marginal cost savings plus reliable quality of work. This is much better than constantly changing vendors which will cost you more in the long run. You’ll also gain preferential treatment and access to insider or expert knowledge.

Understand Your Vendor’s Work

Since your vendor also wants to earn money, you have to be understanding of their situation as well. Ask questions from your vendors to better understand their side of the business. You must realize that if you are constantly pushing them to cut costs, their quality will suffer, or they may even go out of business.

Negotiate An Agreement That Will Benefit Everyone

When dealing with vendors, negotiations should be completed in good faith. Discuss and acknowledge points that can help both sides accomplish their goals. Take note that if you uphold strong-arm negotiation tactics, it won’t be long before one party walks away from the deal.

Find the Best Value

When negotiating with vendor management companies, it isn’t always necessary to get the lowest price as it has the tendency to bring the lowest quality. Just like what they say, you get what you pay for. Thus, you should be willing to shell out more money to receive better quality. Make sure to specify the quality details in the contract.

Conclusion

In many companies, vendor management is just all about finding the lowest-cost vendor for a particular IT product or service. While this practice may help cut down IT operating costs for a business, it may be difficult to receive service excellence. Thus, to have continuous and harmonious relationships with vendors, you must see to it that initial agreements are mutually beneficial for both parties. Observing effective vendor-management processes will ensure the service quality, cost, and satisfaction will be in sync with an organization’s strategic goals and IT requirements.

Want to learn more about what is vendor management? Reach us out at Ultimate Technical Solutions Inc. We provide vendor management services that can streamline your processes, reduce operating costs, and free up your IT team’s time. We use extensive industry experience to strengthen your IT relationships and to help you make informed decisions when it comes to your infrastructure. For more information, contact us at (504) 370-2102.