04 Sep Tips for Successful Vendor Management
When a corporation signs a contract permitting another firm to provide a product, it transfers management over that product to the new contract manufacturer. Therefore, it is crucial that the corporation form a very good relationship with its contract manufacturer.
Most corporations work cohesively with the contract manufacturer and award efficiency with more business. When signing contract, corporations should ensure that the contract manufacturer’s requirements are in line with their own. They must consider the strategies through which they check merchandise to ensure that they’re of acceptable quality and the end product meets their standards.
Vendor management practices play a key role in facilitating a successful contract engagement between corporations and contract manufacturers. Vendor management allows you to build a relationship with your manufacturers, suppliers, and service providers that will strengthen both businesses. Vendor management is not negotiating the lowest price possible but constantly working with your vendors to come to agreements that will mutually benefit both companies.
Share Information and Priorities
The key to succeeding in vendor management is to share information and priorities with your manufacturers and vendors. Appropriate vendor management practices provide only the necessary information at the right time to allow a vendor to serve your needs better. It may include limited forecast information, new product launches, changes in design and expansion or relocation changes.
Balance Commitment and Competition
One of the goals of vendor management is to gain the commitment of your vendors to assist and support the operations of your business. On the other hand, the vendor is expecting a certain level of commitment from you. However, don’t limit yourself to just sourcing one solution. Shop around and get competitive bids.
If a vendor supplies a key part or service to your operation, invite that vendor to strategic meetings that involve the product they work with. Remember, you brought in the vendor because they could make the product or service better and/or cheaper than you could. They are the experts in that area, and you can tap into that expertise to gain a competitive edge.
Seek Long Term Partnerships
Vendor management prioritizes long-term relationships over short-term gains and marginal cost savings. Constantly changing vendors to save a penny here or there will cost more money in the long run and will impact quality. Other benefits of a long-term relationship include trust, preferential treatment and access to insider or expert knowledge.
Understand Your Vendor’s Business Too
Remember, your vendor is in business to make money too. If you are constantly leaning on them to cut costs, quality will suffer, or they will go out of business. Part of vendor management is to contribute knowledge or resources that may help the vendor better serve you. Asking questions of your vendors will help you understand their side of the business and build a better relationship between the two of you.