Entrepreneurs learn a lot from running their business. It is worth the effort, cost, resources, and time required to complete something yourself as opposed to outsourcing it to third-party vendors.
Many times, outsourcing is cheaper than hiring someone to do it. It is also beneficial for many reasons. It allows your business to concentrate on what it does best: producing your product or providing your service. You are also providing profit and business to your vendor. It’s a win-win scenario.
Management of multiple third-party vendors
Your business may recognize that it must work with different vendors to complete certain tasks or projects, but that does not negate the fact that managing multiple vendors simultaneously can be difficult.
There are so many moving parts, it can be difficult to keep track of everything.
Here are some common considerations when managing multiple vendors.
Vendor Management Strategy
Before you can start calling potential vendors for specific projects, it is important to create a vendor management strategy. It is important to determine which projects you require vendors, how long they will be needed, and the guiding principles that you use in choosing the right vendors. Both you and the vendor will have a better understanding of your expectations for delivery if you identify them early.
Vendor Selection Process
The second step is to develop a selection criteria that will help you narrow down the vendors you are considering. It is important to have a set standards that are as objective as possible in order to eliminate biases when making a decision. This will also help make vendor evaluations easier and more efficient. After you have established the criteria, you can begin accepting bids from vendors.
Selection of Vendors and Contract
After you have received bidders, you can now choose the vendor that best suits your business needs. You will then need to create a contract detailing the price, deliverables and metrics that will be used to evaluate performance.
This stage is where you evaluate the performance and output of the vendor and ensure that your business keeps its end of any deal, including timely payments and feedback. To ensure that you and your vendors are on the same page, it is important to maintain constant communication.
You will need to assess if your vendor was able to deliver the products or services you agreed upon. You can evaluate their performance and decide if they are capable of fulfilling the terms of the agreement. You can either extend the contract or terminate it if necessary.
Helping You Manage Multiple Vendors
You will need to keep track of each vendor you deal with, as you can see. This is a lot to keep track of when running your business.
You can ask your trusted managed services provider about their vendor management program to make things easier.
Vendor management systems are usually web-based applications that serve as a central platform to manage multiple vendors. There are many features that will help you at all stages of vendor management, from selection to evaluation.
A good vendor management system should include the following:
- Unified Dashboard – This section gives you a complete overview of all vendors with which you are in touch. This usually displays the agreed price and the due date. It may also include information about the vendor’s products and services. It can also indicate when your contract expires so you can decide whether you want to renew it.
- Vendor Database – You can use the system to store contact information for vendors. Each vendor can be classified based on its products or services. You can even designate a point person to each one.
- Section for Vendor Evaluation – You can add a section to your system where you can assign metrics and assess each vendor. This will allow you to keep your reviews objective.