The term vendor management is used to describe the activities in researching and sourcing vendor services. This may but not limited to, quotes with pricing, turnaround times, capabilities, and quality of work, negotiating contracts, managing relationships, assigning jobs, evaluating performance, and ensuring payments are made. It requires a lot of skills, resources, and time.
Though many business owners believe that vendor management is simply about finding the supplier with the cheapest price for a product or service, it’s about more than that. It’s about streamlining the process for heightened efficiencies and managing vendor relationships to ensure that the agreements made are mutually beneficial for both parties.
The 4 Parts of Vendor Management
Vendor management is comprised of 4 steps. The first is the establishment of the business goals. It’s much easier to select and manage vendors when you have clearly defined performance parameters to compare and contrast.
The second part of the process is to select the best vendors that will be able to match your company’s performance characteristics. Every vendor will have its strengths and weaknesses, and choosing the right one is a very critical task to optimizing operational results.
Third is managing your suppliers. On a daily basis, your vendor managers will need to monitor performance and output, ensure contract terms are being followed, approve or disapprove changes, provide feedback, and develop relationships through effective communication, honesty, and integrity.
Finally, the fourth aspect of vendor management is meeting your goals on a consistent basis. This requires continuous work in influencing vendors to meet performance objectives to ensure profitability.
These 4 parts are all wrapped up in how you manage your vendors. We’ve concluded the best possible way you can manage and control metrics, is through a well designed vendor management software.
Original Source: https://www.hcmworks.com/blog/what-is-vendor-management