Most organizations rely on vendors to provide the goods and services that allow you to successfully run your business, and usually, the larger the company, the more vendor outsourcing takes place.

To get the most out of your vendors, and to manage them properly, you need to take a strategic approach to building and maintaining relationships with your best vendors.

You could be working with dozens, or even hundreds of different vendors, all with different contract terms, pay rates, and points of contact that must be efficiently managed. And that's where a good vendor management program comes in.

The term vendor management is used when describing the activities included in researching and sourcing vendors, obtaining quotes with pricing, capabilities, turnaround times, and quality of work, negotiating contracts, managing relationships, assigning jobs, evaluating performance, and ensuring payments are made.

Effective vendor management requires a lot of skills, resources, and time. It’s about streamlining the process for heightened efficiencies and managing vendor relationships to ensure that the agreements made are mutually beneficial for both parties.

With effective vendor management processes in place, you can properly establish service, quality, cost, and satisfaction goals and choose and manage third-party suppliers that help you achieve those business goals.

To manage a multiple and diverse set of vendors successfully, there's a four-step process to follow.

1. Establish business goals like those mentioned above. It’s much easier to select and manage vendors when you have clearly defined performance parameters to compare and contrast.
2. Select the 'right vendors' you'll be able to match your company’s performance characteristics. Every vendor will have its strengths and weaknesses, and choosing the right one is a very critical task to optimizing operational results.
3. Manage your suppliers on a daily basis, your vendor managers will need to monitor performance and output, ensure contract terms are being followed, approve or disapprove changes, provide feedback, and develop relationships through effective communication, honesty, and integrity.
4. You'll need to hit your goals on a consistent basis. This requires continuous work in influencing vendors to meet performance objectives to ensure profitability. 

About HCMWorks

We are a contingent workforce service provider helping organizations gain better access to talent through the use of independent contractors, consultants, temporary workers, freelancers and other non-payrolled employees. We provide the expertise, the technology, and processes to help you reduce your workforce costs, mitigate against misclassification and co-employment risks, and increase the efficiency and timeliness of your contingent recruitment process. Read more about what our clients say about us here.