4 Best Practices of Successful Vendor Management

Posted on Aug 15, 2017 7:00:00 AM by Noor Al Abid

Vendor Management Best Practices

Vendor management is a broad, yet growing, practice within small and mid-sized businesses. A strong vendor management system allows your organization to effectively manage costs as well as engage in temporary hiring and recruiting. If the idea of vendor management, either as a role, department, or general system, is new to you, it’s good to become acquainted with a few best practices. Here are simple and relevant ways to get in on the benefits of successful vendor management. 

A Point System To Point You In The Right Direction

When selecting your vendors, using a points system is a tried and true way to make strong decisions on behalf of your company. The criteria you choose should be based on your organization’s highest priorities. You’ll want to limit the number of criteria you use, as you can’t afford to be too picky – no vendor will be perfect. Some ideas for criteria include: years in business, average delivery time, pricing, awards and testimonials, and years working with your company. Rank vendors on a points scale, with certain benchmarks being weighted higher than others in accordance with your organization’s values.

Get The Software Requirements Down

Using a web-based vendor management system, also known as a VMS, is an excellent way to give yourself a clear look at the costs, liability, and productivity of any given vendor relationship in relation to your budget. In other words, it allows you to manage your contingent or non-employee workforce efficiently and smoothly. There is an abundance of software options for you to choose from, given the increasing awareness of VMS essentiality.

Backup Your Bid

Preparing RFQ (Request for Quote), RFI (Request for Information), and RFP (Request for Proposal) documents in order to solicit bids will provide you with streamlined processes for assessing and analyzing bids in order to make informed decisions. Once you receive bids, you can cross evaluate these with your points system and, as a result, have full confidence in your selection.

Benchmarks Are The Roadmap To Success

Vendor management doesn’t end after the contract is signed. In advance, compile benchmarks by which to evaluate the vendor success. Maintain these over the course of the project by discussing them with the vendor and giving them the opportunity to knowingly aim for them. Make sure to provide vendors with positive as well as critical feedback in order to nurture the relationship and encourage success.

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