Before we jump into the nitty-gritty, lets talk basics. A vendor is a person or company that sells something directly to you. The product being sold could be tangible, such as the computers in your office or the software you use to track your inventory. The product could also be intangible, such as Momentum providing services for your project management needs or if you need business analysis.

Individuals, working for profit, run a private sector business and are not government which is considered public-sector which has it’s own vendor management needs. Retail, e-commerce, health & beauty, manufacturing, and even franchises are in this category. In the United States, approximately 85% of businesses are considered Private Sector.

Private sectors have full control over the vendors they wish to use. As private sector, your choices seem endless with minimal restrictions. Who you want to work with is who you get to work with.

Vendor Management

Just because you are an independently owned business with an array of vendors you can choose from, does not mean you can sleep soundly at night with no further maintenance   to these relationships. And yes, I said relationships.

Vendor Management is a broader process that includes:

1. Vendor Selection
2. Contract Management
3. Vendor Relationship Management (VRM)
4. Performance Evaluation
5. Service Excellence

Vendor Selection – Oh, the Choices!

Personally, too many choices make me more indecisive than ever. I am more of a choose from A or B kind of person, rather than A thru Z kind of person. Private sectors fall under the second category, which ironically can be intimidating, but with enough structure the choices become controlled. What characteristics of a vendor would help your decision making easier?

• First and foremost – cost. If I am spending my own money, I know I want the biggest bang for my buck.
• Secondly, I would consider their reputation, responsiveness, and workflow. I need to be assured the vendor I choose is quality over quantity because personally, that is more important.
• Lastly, I would want their communication to be transparent and their customer service to be top tier. Human error is real so when mistakes happen, I want to know my vendor will rectify the issue.

It’s Written in the Contract

Contract management is the process of determining the Scope of Work (SOW) that is detailed in the contract so that everyone’s on the same page and all the requirements and deliverables are agreed upon and met. This is an area that is often inadvertently handled poorly. Ambiguous language, poor details and other factors can lead to expensive fixes later as well as ruin vendor relationships. Sometimes even ending in litigation. Momentum’s consultants are exceptionally talented at identifying and Building the SOW for solid contracts that ensure what is promised is clear and delivered. Once the contract is signed, it must be managed to carrying out a contract’s obligations, which may include Service Level Agreements (SLAs). SLAs are another area where Momentum can provide significant expertise to ensure quality and track performance. As a Private Sector, you don’t have anyone above you stating what you should and should not include within your contracts to protect yourself. Your best interest is not always at the forefront of the vendors mind, but it should be. Review the contract provided to you, preferably with an attorney. If a vendor provides you with a contract that essentially asks you to sign all your rights away – that is not the type of vendor you want to work with anyway.

Vendor Relationship Management (VRM)

You chose a vendor and signed the contract. That must be it, right? Wrong. VRM is a key component to the entire process. VRM focuses on managing the relationship with each vendor and controlling costs. An example found in private sectors would be a dry-cleaner who uses a vendor to supply them with their packaging supplies such as hangers and plastic garment bags. This particular dry-cleaner bulk orders their supplies so the vendor only has to replenish the goods quarterly. Throughout the year, VRM is when you are maintaining contact with the vendor, upholding your rapport, and carefully cultivating your relationship. Additionally, inflation is at the forefront of all of our minds and inevitably worsening. As I mentioned earlier, you want the biggest bang for your buck, so watching and even negotiating costs is something that should be kept up to date. David Fulton, one of Momentum’s Consultants recalls,

I was brought in to turn-around a troubled project that was months behind schedule. The sponsor and vendor were so frustrated they were barely talking. When I examined the SOW I realized a big hurdle was the contract required the vendor use an agile approach but the client needed predictive planning and reporting. They were speaking different languages. Once we aligned expectations, relations improved and the project was completed on time.

A+

Here is your daily reminder – Nobody can read your mind! Improving performance and quality while lessening errors comes from communication. Prioritize and evaluate your vendor’s performance. This sets clear expectations while maintaining a harmonious work relationship. Successful vendor management includes monitoring performance and addressing issues early to stay ahead of problems and constantly improve. Here at Momentum, one of our vendors assists with our Social Media accounts. On a monthly basis, we discuss the pros and cons of the the prior month. Through these performance evaluations, our plans are strategically adjusted and defined, and the quality of work progressively improves from our vendor.

Momentum Takes on Private Sectors

Momentum is here to help all businesses, no matter the shape or size to achieve and maintain successful vendor relations. Our combination of strategy, quality, and expertise has brought repeated success throughout our business history and we would be honored to help you manage your vendors today! Contact us to schedule your consultation appointment!