subject: Creating Good Vendor Management Services Relations [print this page] Vendor management allows you to build a relationship with suppliers and service providers that will strengthen and mutually benefit both businesses. This, however, does not necessarily meannegotiating the lowest price possible, but coming to an agreement that is a win-win situation.
Share information and priorities
The most important success factor of any business arrangement is to share information and priorities with one another. That does not mean throwing open the accounting books and giving service providers user IDs and passwords to the company systems. Appropriate practices provide only the necessary information at the right time that will allow a vendor to better service a particular need. This may include several aspects of the business:
Limited forecast information
New product launches
Changes in design, and
Expansion or relocation changes
Balance commitment and competition
One of the goals in vendor management is to gain the commitment of vendors to assist and support the current business operations. This does not mean blindly accepting the prices they provide. Always get competitive bids.
Allow key vendors to help strategize
If a vendor supplies a key service, invite that vendor to strategic meetings that involve the product they work with. They are the experts in that area and can help give the company a competitive advantage.
Build partnerships for the long term
Vendor management seeks long-term relationships over short-term gains and marginal cost savings. The benefits of a long-term relationship include trust, preferential treatment and access to insider or expert knowledge.
Seek to understand the vendor's business as well
Remember, the vendor is in business to make money too. If by constantly leaning on them to cut costs, either quality will suffer or they will go out of business. Part of mutually beneficial arrangement is to contribute knowledge or resources that may help the vendor better serve the business. Asking questions of vendors will help in understanding their side of the business and building a better relationship.
Negotiate to a win-win agreement
Good vendor management dictates that negotiations are completed in good faith. Look for negotiation points that can help both sides accomplish their goals.
Come Together on Value
Focus the vendor management process on the quality gained for the money that is paid. Be willing to pay more in order to receive better quality. If the vendor is serious about the quality they deliver, they won't have a problem specifying the quality details in the contract.
