Vendor Management – They Are Important to Your Business

Vendor Management

If you are in business you will have vendors and the way you manage them is critical to your business.  We watch our customers like a hawk, but how much time are you putting in to managing vendors?

Why is this critical?

Not paying attention to how your vendors are performing can have a big impact for your company.  They are your support team, they should be the experts in what they do and provide services you can’t.  If they start having delivery problems it will impact how you operate.  It can then lead to you failing to meet your customers expectations.

How to choose?

First, evaluate what you need from a vendor. Are you outsourcing, getting parts or a service to support your business.  If there is a need then there is a company out there doing it.  Run a “Google” search with a couple of keywords relating to what you want.  You should get a pretty good list from that.  Go past page 3 if the results are still pulling companies.  Many good businesses have a hard time understanding SEO.  I know I do!

Second, research the potential companies you want to hire.  Just like a potential employee you need some background on them.  98% of companies will have a web presence of some kind. If they don’t most likely they don’t need new customers.  Not necessarily a bad thing but they may not be able or want to gain you as a customer.

Evaluate in your research some of these things & do it before even contacting them:

  • Website – did they put any effort into it? Is it outdated looking?  What does the About Us page say? Look for recommendations they put on there.
  • Social Media – are they using FB, LinkedIn, Twitter  or some other form.  This is a great place to learn about them.  Granted it will be there best but you could use their posts & send a message to a couple of their followers to gain an insight of why they like their page.
  • Email & Call some colleagues  – send out some emails asking if anyone has worked with your short list you are considering.  Those that have call and talk to them.  Make the phone call you’ll gain a lot more then just the email.  Most people will tell you a negative while talking before they will put in writing.

Third, contact 3 – 5 vendors and start negotiating.  Beware of low ball prices that probably means they skimp some where and it can come back to haunt you.  How did each company respond to your inquiry?  Fast and hard or never?  Both are a red flag!

If they come at you with a lot of calls, emails and high pressure to sign that is never a good thing.  It makes them appear desperate and it may indicate a lack of focus on their current customers.

Not responding in some way also shows that they either don’t need new customers or they don’t really understand customer service.

Hiring

My train of thought is this, make sure price is not the only driving decision.  Value is the priority.  They are going to become a part of your company process.  If you value your company you are going to want the same from your supplier.

Make sure to include them in project updates, sale cycles for your business so they can ramp up before, let them know that you’ll be tracking their performance & reporting it back to them and any other critical data to make sure that what they supply will meet your needs.

This deal should be a win – win for both.  A happy vendor will be more likely to come through later when you need something unusual from them.

Tracking Performance

Each vendor should be looked at periodically.  Some will need to be tracked every week while others will not.  Create a way to categorize how important they are to the process they support.    This will make reporting a lot easier later on, you’ll be able to pull the vendors you need at the time needed.

Run regular reports on deliveries, billing and how they might have affected production or sales.  Your system should include ways for your employees to note issues.  Their the ones dealing with the vendor so make it easy for them to track the performance they see.

If the vendor uses social media like them and check their pages during your review.  Best way to get updates about them.

Regular Contact

The suppliers you mark important should be contacted regularly.  Regular communication can help spot issues sooner.  You may find out a key employee of their’s left, that commodity prices core to your product are going up or down and other valuable information from them.  Leverage their knowledge they are the experts in what they do.

Until Next time!