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Irrespective of the market a firm finds itself, it would always have need for vendors. Firms might not handle the supply of their primary sources of supply for their production and operation alone.
Even if they can, it is often efficient and effective to sub-contract such activities to more specialized contractors. This is usually why firms contract organizations or individuals to help with some peripheral services.
These specialized contractors are often called vendors.
What are vendor Management Best Practices
The efficiency of the relationship between the vendor and the company is determined by applying the vendor management best practices.
The Vendor management best practices are important to strengthen the relationship between the vendor and a company. A strong and mutual relationship between the company and its vendors, built specifically on the principles of honesty and integrity, is as important as updating the account books of the company.
Summarily, relationship is everything in business, and the vendor management best practices foster this relationship. Some of the best practices will be explained below.
The vendor management best practices open its first door to the modus operandi heralding the selection of the vendors.
Management must do thorough analysis of its business requirements and search, select, and contract such vendor in line with its business requirements as analyzed.
This is a tasking point in vendor management. It could be emotional if one is new to the business, since one can fall for emotions and contract a vendor that might not offer efficient services.
In following the vendor management best practices, one must be wary of the glitz and sizzle there-in. Hence, one must scrutinize effectively the chances and prospects that hiring the services of such vendors provides.
One must ascertain whether the proposed job is within the expertise of the vendor. The glitz and sizzle means the quality of workers and number of consultants that vendors might send initially. They might not be there when the contract is signed.
One vendor management best practice is to ask meticulous questions and do alternative research about the prospect of hiring a particular vendor.
One of the vendor management best practices yet to be discussed includes the flexibility of contracts. In simpler terms, contracts that involve a lot of restrictions and stiff and punitive punishments should be avoided.
Therefore, one should always go for short-term contracts with renewable options, rather than the long-term contracts.
Companies should devise best and efficient methods to monitor performance of vendors. Companies should not assume the vendor will work according to the plans of the contracts. This is because some vendors have ways of cheating. The vendor must be monitored constantly in the beginning to gain trust.
Communication is key to the survival of any relationship, including the relationship between vendors and companies. A well-formed line of communication will enable the vendor to know what you need and will reduce misunderstanding. Effective communication tends to eschew problems proactively.