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Vendor Management Process
A business whose duty to another business is the provision of goods and services to cater the production or operational needs of the business are called vendors. These vendors constitute an important part of the business, which should be managed carefully to ensure efficiency. Shabby management of the processes of selection, performance management, and evaluation would usually be visible on the firm’s account books.
The vendor management process is a totality of steps that dovetail into the efficient use, management, and remuneration of the organizations that provide vendor-related services to business. An erroneous belief regarding this field is that vendor management process involves only tracking and obtaining services from vendors with the cheapest price amongst others.
This might be true for some services and industries, but for many, it involves the efficient procurement of services and products. It also involves meticulous streamlining of the processes involved for improved results and management of the relationship between vendors and umbrella companies. This is usually to ensure compliance in agreement.
Given an effective and well-planned vendor management process in the firm, the above stated objectives could be achieved. This is a priceless activity in a typical firm, since it oversees the activities of vendors attached in various concerns to the firm. The following are the steps involved in an effective vendor management process.
The clear identification of objective is an important aspect of the vendor management process. This is because it streamlines the efforts and capabilities of both the supplier and the buyer of such services to one goal or group of goals. During the time for evaluation, the services of the vendor(s) will be examined on the basis of the goals of the firm. The result will inform the decision whether to use the help of the vendor.
Selection of the best vendors should be the next port of call in the search for an effective vendor management process. This is because every vendor is unique, and every company is also unique. If one does not track and observe vendors carefully to ensure the hire of the best vendor, the company might risk confusion of overall objectives. It is always necessary that the firm uses vendors with similar performance characteristics.
The management of the performance of the vendor is the link between the time a vendor is hired and the time the vendor is fired. This involves all the management activities of the company’s vendor manager to ensure compliance and agreeability in services. Here, the manager checks performance, gives feedback, accepts or discards changes, provides grounds for good relationship, and ensures honesty.
The final stage is the evaluative stage, where the vendor manager seeks to ensure if the goals have been met. Different firms have different ways of managing this stage, since it is the most important stage of the vendor-company contract. Care should be given to evolve parameters agreed upon earlier by both parties as the requisite parameter for measuring and certifying results.