Vendor management allows you to build a relationship with suppliers and service providers that will enrich both businesses. Vendor management services (VMS) are designed with the goal of minimizing expenses while maximizing quality and terms of transactions. This does not necessarily mean negotiating the lowest possible price. The aim is to identify and reduce risks.
Share information and priorities
One of the most important factors in any business arrangement is the sharing of information and priorities with each other. Appropriate practices are to provide only necessary information that will allow the vendor to better service any particular needs. This may include aspects such as limited forecast information, new product launches, any changes in design, along with expansion or relocation.
One of the goals of vendor management is to gain the commitment of vendors to assist and support the current business operations. When making such an important decision, before accepting the prices being provided by a particular vendor you should always get competitive bids.
Vendor management companies seek long-term relationships, as opposed to short-term gains. The benefit of a long-term relationship includes trust, preferential treatment and often comes with access to insider or expert knowledge. If a vendor supplies a key service you should invite them to strategic meetings that involve the products they’re working with. Since they are presumed to be experts in that area they can help give your company a competitive advantage.
Seek to understand the vendor’s business as well
By constantly leaning on the VMS to cut costs, you could wind up with the quality of services suffering or the likelihood that they may go out of business. Part of vendor management is to contribute knowledge or resources that may help the vendor better serve your business. Asking questions of vendors will help in understanding their side of the business and building a better relationship.
Good vendor management dictates that negotiations are completed in good faith. Look for negotiation points that can help both sides accomplish their goals. Vendor management services should focus on the quality of the money that is being invested. By paying more you can expect to receive better quality. If the vendor is serious about the quality that they deliver then they won’t have a problem specifying the details of their services in the contract.