Research Journal of Science & IT Management - RJSITM - The ...

information, new product launches, changes in design and
expansion or relocation changes, just to name a few.
3.2 Balance Commitment and Competition: One of the
goals in vendor management is to gain the commitment of
your vendors to assist and support the operations of your
business. On-the-other-hand, the vendor is expecting a
certain level of commitment from you. This does not mean
that you should blindly accept the prices they provide.
3.3 Allow Key Vendors to Help You Strategize: If a
vendor supplies a key part or service to your operation,
invite that vendor to strategic meetings that involve the
product they work with. Remember, you brought in the
vendor because they could make the product or service
better and/or cheaper than you could. They are the experts in
that area and you can tap into that expertise in order to give
you a competitive advantage.
3.4 Build Partnerships for the Long Term: Vendor
management seeks long term relationships over short term
gains and marginal cost savings. Constantly changing
vendors in order to save a penny here or there will cost more
money in the long run and will impact quality. Other
benefits of a long term relationship include trust, preferential
treatment and access to insider or expert knowledge.
3.4 Seek to Understand Your Vendor's Business Too:
Remember, your vendor is in business to make money too.
If you are constantly leaning on them to cut costs, either
quality will suffer or they will go out of business. Part of
vendor management is to contribute knowledge or resources
that may help the vendor better serve you. Asking questions
of your vendors will help you understand their side of the
business and build a better relationship between the two of
you.
3.5 Negotiate to a Win-Win Agreement: Good vendor
management dictates that negotiations are completed in
good faith. Look for negotiation points that can help both
sides accomplish their goals. A strong-arm negotiation tactic
will only work for so long before one party walks away
from the deal.
3.6 Come Together on Value: Vendor management is more
than getting the lowest price. Most often the lowest price
also brings the lowest quality. Vendor management will
focus quality for the money that is paid. In other words:
value! You should be willing to pay more in order to receive
better quality. If the vendor is serious about the quality they
deliver, they won't have a problem specifying the quality
details in the contract.
4. Vendor Management Best Practices
Whether you're a multimillion dollar company or a small
business with a few employees, here are some Vendor
Management Best Practices that any size business can use.
4.1 Vendor Selection: The vendor management process
begins by selecting the right vendor for the right reasons.
You will need to analyze your business requirements, search
for prospective vendors, lead the team in selecting the
winning vendor and successfully negotiate a contract while
avoiding contract negotiation mistakes.
4.2 Scrutinize the Prospects: Once you start to look at
individual vendors, be careful that you don't get blinded by
the deceptive offers. Depending upon the size of the
possible contract, they will pull out all the stops in order to
get your business. This may include a barrage of
overzealous salespeople and consultants. Just because they
send a lot of people in the beginning, doesn't mean they will
be there after the contract is signed.
As you begin your vendor search, ask some questions that
will help you eliminate the more obvious misfits. For
example, Is the proposed material, service or outsourcing
project within the vendor's area of expertise?
4.3 Remain Flexible: Be wary of restrictive or exclusive
relationships. For example, limitations with other vendors or
with future customers. In addition, contracts that have
severe penalties for seemingly small incidents should be
avoided. If the vendor asks for an extremely long term
contract, you should ask for a shorter term with a renewal
option. On the other hand, you should be open to the
vendor's requests also. If an issue is small and insignificant
to you but the vendor insists on adding it to the contract you
may choose to bend in this situation. This shows good faith
on your part and your willingness to work towards a
contract that is mutually beneficial to both parties.
4.4 Monitor Performance: Once the relationship with the
vendor has begun, don't assume that everything will go
according to plan and executed exactly as specified in the
contract. The vendor's performance must be monitored
constantly in the beginning. This should include the
requirements that are most critical to your business. For
example: shipping times, quality of service performed, order
completion, call answer time, etc.
4.5 Communicate Constantly: The bottom line in vendor
management best practices is: communication. Don't assume
that the vendor intimately knows your business or can read
your mind. A well established and well maintained line of
communication will avoid misunderstandings and
proactively address issues before they become problems.
5. Choose Your Vendors Wisely:
Your vendors have as much interest in your company's
success as you do. When you make a lot of sales, they make
a lot of sales; when you get paid, they get paid. Having
reliable and trustworthy vendors can help your business
succeed, just as dealing with unreliable or shady firms can
cause major setbacks. Start by asking around; other business
owners in your area can be a great source of information.
Once you've got a list of names, call your local Better
Business Bureau to find out whether any complaints have
been filed against any of the vendors on your list. You can
visit vendor Web sites and even tour their physical
locations. You can ask for customer testimonials and for
product samples as well. The key is to get as much
information as possible before you make a large monetary
commitment to a vendor you don't know.
As you begin to choose vendors, particularly those who will
stock your inventory, try to think of them as business
partners. You want to choose the ones with whom your
company can develop a long-term, mutually profitable
relationship, and that relationship starts with your first
www.theinternationaljournal.org > RJSITM: Volume: 01, Number: 08, June-2012 Page 31