Vendor Management System
One of the first lessons entrepreneurs learn when running a business is to not do everything on your own. The cost, resources, time, and effort needed to accomplish something by yourself compared to outsourcing it to a third-party vendor should be worth it.
In many cases, the cost of outsourcing something is lower than doing it on your own. Besides, it is beneficial for various reasons. By entrusting certain functions to a third-party vendor, it allows your business to focus on what you do best, which is to produce your product or provide your service. Moreover, you are providing business and profit to your vendor as well. It is a win-win situation.
Managing Multiple Third-Party Vendors
While your business recognizes that it has to work with different vendors for certain functions or for certain projects, it does not remove the fact that managing multiple vendors at once can be complicated.
It has so many moving parts that keeping track of what needs to be done can get your head spinning.
In fact, here are some of the most common factors considered when managing multiple vendors:
Vendor Management Strategy
Even before you start calling possible vendors for certain projects, you have to first create an overall vendor management strategy. You have to identify which projects you need vendors for, the duration of the project, and also the guiding principles that will guide you in selecting the right vendors. By identifying what you want to achieve early on, the delivery expectations will be much clearer to both you and the vendors.
Vendor Selection Process
The second stage is to create a selection criterion that can help you filter the list of vendors you will be considering bringing on board. The goal is to create a set of standards that is as objective as possible to remove any bias when you make the decision. This should also make the selection process much more efficient because it will make vendor evaluation much easier and faster. Once you have established these criteria, you can start taking bids from different vendors
Vendor Selection and Contract
Once you have bidders you can now select the vendor you think will best fulfill your business needs. After that, you will have to draft a contract that will indicate the price negotiated, the deliverables, the quality of product or service, and the metrics on which performance will be evaluated.
This is the stage where you monitor the output and performance of the vendor, while also making sure that your business is keeping its end of the deal including timely payments and feedback. You have to have constant communication with your vendors to make sure that you are always on the same page.
Based on the metrics you have agreed upon when you signed the contract with your vendor, you will have to evaluate if they were able to deliver the agreed upon products or service that is in line with the quality you both agreed to. Based on your evaluation, you can decide if they are able to fulfill their end of the agreement. If needed, you can extend their contract or you can terminate it instead.
Helping You Manage Multiple Vendors
As you see above, you have to do all these things for each vendor that you will have to deal with. That is a lot of things to track on top of running your own business.
To make things simpler, you can go to your trusted managed service provider and inquire about their vendor management system.
A vendor management system is usually a web-based application that serves as a central platform for managing multiple third-party vendors. It has different facets that can help you in the different stages of vendor management from selection to evaluation.
Some of the features of a good vendor management system include:
- Unified Dashboard – This part serves as an overview of each vendor that you are in contact with. It usually shows the price agreed with the vendor and when payment is due. Some may even include the breakdown of items and services provided by each vendor. In addition, it can also show when a contract is due to end so that you can decide if you need to renew or not.
- Vendor Database – You can also use the system as a repository of vendor contact information. You can classify each vendor based on their products and services, and even include a designated point person for each one.
- Vendor Evaluation Section – Your system can also include a section where you can set metrics and evaluate each vendor. This will help you keep your reviews objective.
Vendor Management System from thinkIT Solutions
thinkIT Solutions is a full-service provider of IT solutions including a central vendor management system that can be used by businesses of all types and sizes.
This aims to help businesses manage multiple vendors effectively and efficiently.
For inquiries on how thinkIT Solutions can help you manage multiple vendors, contact us now at (504) 608-1132!