Managing your business goes beyond providing your customers with quality services and taking note of their feedback. It encompasses dealing with suppliers, contractors, and vendors to ensure everything runs smoothly behind the scenes. Choosing your vendor partners very carefully can significantly affect your business.
Knowing how to select and manage vendors properly is crucial to setting your business apart from the competition. A strong vendor relationship will enable your business to achieve its objectives and visions.
A considerable part of your business success is fostering strong vendor relationship management (VRM). This article explores VRM and how to manage your vendors and partners accordingly for the best results.
What is Vendor Relationship Management?
Vendor Relationship Management (VRM) is the process of communicating and collaborating with vendors to establish a symbiotic union. VRM enables businesses to control costs, mitigate risks, and foster service excellence.
Synchronization between your vendors’ optimum supply management, service procurement, and collaboration will bring positive results for both parties.
An excellent VRM ensures you do not waste quality time building alliances with vendors that will not yield results. To an extent, your viability as a business is tied to the vendor relationships you have established and maintained.
Selecting the right vendors and suppliers for your business might be a challenge. However, you want to rest assured that your supply chain is in the right hands and that your customers and staff are happy.
So, how do you select and manage your vendors for the best results? Find out below:
Review Your Vendors
First, you must select the right vendor partners to build a successful VRM. To achieve this, you need to review their operations critically.
In choosing your vendors, you should answer the following questions:
- Can they be trusted to deliver supplies at established dates and times?
- Does their operation meet your expectations?
- Can they help minimize risks to your business?
- What is their corporate social responsibility?
All of these questions should form the baseline for choosing vendors for your business. You also need to consider the way they source raw materials. Are the supplies ethically sourced? Do your vendors care about environmental sustainability or are you making efforts to reduce their carbon footprint?
These considerations are essential in choosing suitable suppliers for your organization. Supporting a business that does not care about the environment sends the wrong message to your workers, investors, and customers.
According to the Millennial Employee Study, 64% of Millennials will not work for a company that is not sustainable. One-third of the figure said they would take a pay cut to work for an environmentally and socially responsible company.
Think Long Term
In choosing the right vendors for your business, you need to think long-term. Why? Long-term relationships wield more value compared to one-off transactions. Once you select a vendor, you must envision long-term continuity with them.
It will save you a lot of time and resources in vetting a new vendor whenever there are supply needs. On the plus side, you will receive better service when they know the business partnership will last.
Establish Realistic Expectations
You can also build a successful VRM by setting clear and realistic expectations with your vendor partners. The contract should include the scope of their services, the time frame to deliver products or services, and quality standards.
You should also be upfront with how parties will communicate, payment dates, and what decisions to take in an emergency. Setting realistic expectations from your vendors will give a thorough picture of their responsibilities and how they can serve you better.
A significant aspect of managing your vendor partners is communicating with them. It is vital to set up a schedule to be briefed on updates and keep each other abreast of any development.
If your budget or funding priorities change, you should inform your vendors immediately. It will help them to adjust to the evolving demands and seek solutions where necessary.
Allow Major Vendors Into Strategic Meetings
You can also manage and build sustainability with vendors if you let them into your meetings. Inviting key vendors to meetings will make them feel like they are part of your success story. Thus, their loyalty to your business will be almost unquestionable.
More so, they can provide you with an ‘outside insight’ that will improve your bottom line.
However, only trustworthy vendors should be part of such meetings – in order not to leak trade secrets.
Understand Your Vendors’ Business Too
Your vendor partners are in business because they also want to make profits. As much as you are upfront about their expectations, you must also learn about them. They will also put your business first, and you can build a successful business partnership with them.
Thus, you should ask questions to understand how they provide deliverables.
Vendors who feel they are part of your business will dedicate time to prioritize it above other customers. They will also share responsibility for its success or failure.
You should hold your vendors accountable to agreed terms and conditions. They will take your business seriously and always strive to deliver in every way possible.
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Published by Marc Freedman
Marc currently serves as our Chief Cost Evaluator, expertly advising our client management team on how to help you successfully achieve your business and financial growth goals. A respected mentor to all he consults with, he is an avid collaborator and contributor to the spend consultant community, guiding thought leaders to formulate, design, and install the best operational solutions available to their clients.