On Your Terms: Sit Down With Vendors on Your Schedule!

How does someone begin to develop a vendor management program? If you ask Dell for their “Top Tips for Better IT Vendor Management” they say “Don’t grocery shop when you’re hungry.”  Essentially, their premise is the worst time to try and manage your vendor is when you need something from them.  I could not disagree more.  As in your business, your vendors drive to monthly, quarterly and annual goals.  The best time to discuss improving the relationship with a vendor or describing your requirements of them is when you are about to spend money with them.  You are about to help them reach their goals and I cannot think of a better time to ask your vendors to improve, explain, or fix the manner in which they are helping you achieve your goals.

When your team is about to spend money, you are already dedicating internal resources to the analysis of the transaction. At the same time, it is efficient to review your partnership with a vendor and determine the win – win scenario, not only with the transaction, but also moving forward as partners.  Identify what is working and what is not and use this time to make slight adjustments or course corrections to your relationship.

Manage all of your vendors when you have their attention.  You are about to spend money and your team is already engaged in some analysis.  It is efficient.

This overarching theme works for all vendors, not just your strategic vendors.

I think this sequence of developing a vendor management program is important to achieving the goals and honoring the effort of your staff.  Start with how you vet new vendors.

GATHER YOUR DATA: A new vendor is motivated to get past the gatekeepers. Use this motivation to gather the perfunctory documents and information you need to conduct business.  It should be a fairly rigorous process so that you do not require any additional security screenings or general documentation to do business with this vendor.  How they respond to your requests will start to provide insight on how they will value your partnership.

IDENTIFY STRATEGIC PARTNERS:  You know your business and your customers better than anyone else.  Before you create a complicated vendor scorecard, pick your obvious strategic partners and initially focus on managing them.  The initial value propositions of the vendor as defined by your team should be the outcomes your vendors are managed to.  The vendor is managed to these goals and outcomes until your team proves additional or replacement value propositions that merit tracking.

MANAGE THE SIZE OF YOUR STRATEGIC PARTNER POOL:  No other vendor should be accepted into this exclusive group without proving more strategic than a company already in the group (they can be a vendor but not a strategic vendor until they have a track record of providing value to your company).

With all other partners, you might want to start with managing the contractual entitlements and obligations on a transactional basis.  But remember to talk with them around the time you are about to pull out your wallet.