Your suppliers are critical to your success in the market and your profits thus, procurement should be considered as a part of your overall business strategy. A well-managed vendor relationship will result in increased customer satisfaction, reduced / controlled costs, better quality, and better service from the vendor. When problems arise, it will be easier to remedy the situation with your existing vendors in good terms.
Vendor management is a discipline and often web-based application that acts as a mechanism for business to manage and procure staffing services, temporary or permanent placement services, as well as outside contract or contingent labor. It includes managing the vendor affiliation from beginning to securing contract/deal, including documenting requirements, negotiating contract terms, and evaluating proposals. Thus it is important to learn how and why to set up clearly defined roles and responsibilities between the organization and vendors.
The vendor management process begins by selecting the right vendor for the right reasons. Organization should be very objective on this selection and specific on the terms and requirements thus enabling them to evaluate and continuously monitor the performance while being flexible on certain situations to gain value on the mutually beneficial relationship.
Further, communication will avoid misunderstandings and enables organizations to optimally develop, manage and control vendor contracts, relationships and performance for the efficient delivery of contracted products and services. This can help clients meet business objectives, minimize potential business disruption, avoid deal and delivery failure, and ensure more-sustainable multi-sourcing, while driving the most value from their vendors.
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References: Ben Hamilton, James Bucki and Wikipedia