Traditionally, procurement was a simple process including a department buying goods and services. At that time, companies did not understand the importance of managing your relationship with these vendors. Many organizations still do not truly understand the benefits they can receive from vendor management.

But now, enterprises are considering procurement as a part of their overall strategy. You must take a strategic approach to efficiently manage your suppliers. This will help you in getting value for your money.

Large organizations today are successfully implementing vendor management and gaining profits. But, many mid-size enterprises are lacking funds and resources to execute a vendor management program. Vendor management isn’t a principle discipline in midsize enterprises. These enterprises only focus on managing contracts. This results in the inadequate monitoring of vendor performance; and also leads to uncoordinated and inconsistent processes.

In this blog post, we present to you some effective ways for midsize companies to manage their vendors:

1.    Develop a Structure

You must develop a practical governance structure. This governance structure must assign vendor management responsibilities to fundamental activities across the IT sourcing lifecycle. There are three key responsibilities while dealing with vendors:

• Sourcing: You must decide what to buy, from whom and how.
• Procurement: You must decide the process of acquiring products and services.
• Vendor Management: You must ensure that you are getting goods and services that you paid for from your vendors.

Even though midsized organizations carry out these functions, they do not formally assign a specific role or organizational structure to these functions. Thus, you must ensure that your mid-size enterprise, at a high level, assigns roles to these critical functions.

2.    Communicate with Vendors

Communication is the easiest way to reduce any ill will in the relationship. That is why, it is necessary to communicate with your suppliers regarding timelines or issues pertaining to material quality and delivery. You should also ask for the same type of outreach in return. If there is any change in project timelines, you must first inform your vendors. This will help in keeping them in a loop, and you could mutually agree upon a solution.

3.    Allocate Resources

While allocating resources, first identify the significant vendor management functions and tasks. Then, assign staff members who are skilled at performing these functions. It is very important that you define the roles and responsibilities for performing these roles and tasks.

4.    Create a Score Card Template

Many midsized companies do not invest in vendor score-carding or performance management tools. They rely on MS Excel, MS SharePoint, and Google, to create simple score cards and performance dashboards. Vendor performance score cards should evaluate a vendor’s performance across a balanced set of criteria. A standard scorecard must include a vendor’s adherence to service-level agreements and operational performance. It must also evaluate whether the technical and functional capabilities of a vendor’s solution is adequate.

The importance of vendor management is growing continuously as there is a rise in outsourcing tasks or entire functions of an organization to a service provider. An inclusive vendor management program must be adopted by midsize organizations.