How to have Successful Vendor Management

A vendor plays an important role in the success of any organization irrespective of their size and type. Although the management of vendors or suppliers is a very difficult and complex task it has to be done for the benefit of the firm. It is a very important thing to keep an easy going and frequent communication with the vendors. By doing this, a lot of cost could be saved and inefficiencies could be curbed which would then result in better customer service.

Vendor management not only involves the vendor to supply to you at low prices or better service but also maintaining a healthy relationship with them and retaining them. The first step in a successful outsourcing project is to implement a quality assurance program. A well-managed list of vendors helps the organization get a competitive edge as well as a cost advantage. There are no two vendors who are the same. Every company has their own set of unique needs and requirements. Choosing the vendor would be on the basis of your company’s culture and the quantity of orders your firm would need. Any organization would have two options with it – keeping an in house vendor management or getting it outsourced.

Organizing a vendor is a task in itself. The following things should be considered:

• What kind of services or technology is each vendor providing?
• Are any of the vendors overlapping the other?
• Is there any way of consolidating different vendors by any common supplier?

The organization should be clear of what they want. Vendor selection process can be a confusing and complicated process .They need to do their research on the “deal breakers” and “negotiable” as they call them before beginning the actual search. The company should put the most essential or crucial thing under the deal breaker category and the ones that are not essential in the negotiable category.  Having the things categorized or segregated for vendor selection process will save some headaches to the managers.

It is very important to know the target output that an organization needs, while making the list of vendors. This estimation of the output would give an idea about the weekly or monthly delivery schedule for a vendor. Also, the organization must learn from their past experiences with the vendors. They should keep in mind the good things as well as the blunders done by the vendors in the past. Communication is the most vital part in any supplier or vendor management process. There is a chance to lower the possibilities of misunderstandings and problems of any other kind if the vendor is informed as to what is expected out of him prior the deal itself.

It is not an easy process or task to have a good vendor management system in place. It cannot be achieved in a day or month but a long and continuous process. This involves the organization to maintain a good n healthy relation with the vendor and also by having a constant check on its own supply. Thus, if all the above things are done and taken care by an organization it’ll be able to achieve a good vendor management and be successful.

IT Outsourcing, Challenges during takeoff

 An organization may outsource IT work for many reasons. The most important event is the transition period.

Based on the size of the organization and the scope of IT outsourcing, the quantum of preparatory work will be different. But the process involved in preparation is same.

Simple, three step process

1. Setup the TM team.  The Transition Management team. It is essential to have a small team, from IT department as well as the concerned user department. The team members must be capable of transferring the required data to the new IT sourcing team. Must also work on a dedicated basis, to ensure timely roll out.
2. Draw out the transition plan. Use WBS (Work Breakdown Structure) for best results.  Ensure that the plan that is drawn is an integrated one.  Using the WBS, it will be easier to ensure that all steps are on paper.  It may involve, data transfer, status report hand over, shifting of full servers (if servers are being outsourced to a data center) etc, depending on what activity is being outsourced. Accordingly, the WBS may be a big tree with lot of details. It is essential to expand to fully till the leaf, to get best results during transition.
   The plan should be clear and specify a simple matrix giving activities in the proper sequence and the person responsible. The activity list itself should ensure that all dependencies are taken into account.
3. Implementation. Once the plan is ready, implementation will be a cake walk. On the day of transition, a brief shut down of the old systems / process / servers is done, data transferred and then ported to the new structure. Usually this is done during off days to have least disturbance, or if not avoidable, a couple of days break is taken and then a catch up is done to come on line (ERP Implementation).

With all of the above points, to deliver a well organized transition you might take note of this helpful note – Plan your work. Work your plan.

Vendor Relationship Management – By Mihir Sakhle

VRM basically means Vendor Relationship Management. The concept behind VRM is to ‘provide customers with tools for engaging with vendors in ways that work well for both parties independently’.

In today’s business, Vendors play a very important role in the effectiveness & success of your business organization. Vendor management practices can be widely used to build a mutually strong relationship with your vendor/s which in turn will strengthen your company’s overall growth & performance in the long run. If the Vendor management practices aren’t used properly in the first place then it may affect the organization in a bad way which effects will result in your business. Thus vendor management is necessary in the sense that it proves helpful in nurturing the relationship with the vendor which cannot be directly measured against the company’s bottom line. A well managed vendor relationship will result in increased customer satisfaction, better quality of work, & better service from the vendor & also the reduced cost which often proves beneficial for the company financially in the long run. And even if any problem occurs in the middle of the project or you get stuck somewhere not knowing what to do, then a well managed vendor will be very helpful in resolving your issue & providing you with the appropriate remedies. This is where the VRM tool comes in the picture.
VRM tool provides customers to manage their relationship burden with vendors & other organizations. They relieve CRM of the perceived need to “target,” “capture,” “acquire,” “lock in,” “direct,” “own,” “manage,” & otherwise take the lead of relationships with customers
Vendor relationship management is well managed by the Vendor Management System(VMS) or the Vendor Management Office(VMO). The VMS acts as a web based application through which both the vendors & customers are able to engage with each other independently.
The VRM is exactly like the reciprocal of CRM-Customer Relationship Management.
VMS is mostly a software program which helps in distributing the vendors evenly throughout the organizations & facilitates their effectiveness towards the organization. Every member of the organization can use this tool independently & access the tool as & when needed & make the changes in the data.
Most VMO organizations make use of this Scorecard tool which helps them to get their communications & stats among the organization clearly. It helps in setting a clear line of sight between the objectives of the company & their desired results based on the goals set by the company in the first place.
The Scorecard helps in maintaining a clear line of sight between all the aspects of the organization i.e. Finance, Administration, Support/Maintenance, Solutions or the Core part, Customer & so on.
The Scorecard tool is usually used in a project & is very helpful in determining all the various aspects of the projects which go in making a successful well driven project.

By Mihir Sakhle

(A Sourcing Guru since Jun 2011)