Evaluating Vendors with the Help of National Vendor Management Services
When a company evaluates vendors for smaller projects and commodities, it can be pretty straightforward. Meanwhile, bigger projects that have complex parts or multifaceted services need a more elaborative evaluation. The main goal of this evaluation is to eradicate human emotion and political positioning to arrive at a decision that will best benefit the company. It is necessary to be thorough in your investigation, ask for inputs from all stakeholders and use the following methodology to arrive at a unified vendor selection decision.
To make the process easier, companies can tap national vendor management services. Companies that offer vendor management help third-party vendors through frequent collaboration and constant monitoring. They work with your vendors as a team to come up with mutually beneficial contracts that ultimatelr y strengthen both businesses. It prioritizes establishing a long-term vendor relationships oveshort-term gains.
1. Initial Review of All Vendor Proposals
Prior to the evaluation process of the vendor selection team, all proposals should be reviewed for conciseness. If there is any obvious omissions or errors, they should be clarified immediately by the submitting vendor. This will ensure that the evaluation and selection process is thorough and efficient.
2. Document Business and Vendor Requirements
Using a spreadsheet, record the business requirements and the vendor requirements that were put together in the first step. All requirements should be listed in a thorough and detailed listing to achieve a fair and equitable decision.
3. Assign Importance Value for Each Requirement
Rate each requirement’s importance value. Use a scale from one to ten where 1 is extremely insignificant, and 10 is extremely important. If there are members of the selection team who don’t agree with one of the ‘importance values’, just collect everyone’s individual value and calculate an “average” across all members. Meanwhile, a team member that is not qualified to render an opinion on a certain requirement should abstain from submitting a value.
If a requirement appears to be dichotomous and you would want to remove the vendor immediately if they fail to comply with a requirement, you should mark that requirement as “Pass/Fail.” For instance, if your insurance carrier needs any private vendors doing work in protected areas to be “bonded and insured,” then any provider that does not meet this provision will be immediately eliminated from further consideration.
4. Designate a Performance Value
Assigning performance value is the longest process of the vendor selection process. In this step, the team will have to assign a value for the performance of the vendor on each of the requirements. Larger projects may need to allocate each team member more time to evaluate performance scores for each objective.
Once again, if there is any disagreement on the performance value, you can accumulate everyone’s individual value and calculate the average. Use the average score as the performance value for that requirement for that individual provider. Just like before, if the individual vendor has not met the requirement, it can be immediately crossed out from consideration.
5. Calculate a Total Performance Score
After tallying the “importance value” for each requirement and a “performance score” for each vendor on each requirement, you can now calculate a Total Performance Score for each vendor. Multiply the individual Importance Value by the vendor’s Performance Value to know the Total Performance score. Add all of the individual vendor’s Performance Score to calculate the Total Performance Score for the vendor.
6. Choose the Winning Vendor
The cumulative performance score is not intended to be the absolute value of the vendor’s proposal. It should just be a guide to highlight the gaps between vendors and foster meaningful discussion among team members. Suggestions that fall below the front runners’ orders of magnitude may be discarded if the committee decides.
When assessing vendors for your business, you need to check off every activity you need to complete before making a decision. It is imperative to understand exactly what your vendors do and that they also know what your business does, how it runs, and what you’re aiming to accomplish by establishing a partnership with them. Right from the start, you should set clear expectations to avoid a waste of resources.
Ultimate Technical Solutions Inc. provides national vendor management services. We can help you create strong vendor relationships while streamlining your processes and reducing operating costs. 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 about our vendor management services, contact us at (504) 370-2102.