Are You Managing your Vendor Relationships?

Vendor Performance Evaluation. In the absence of agreed upon performance standards, it is not possible to know how well a vendor is performing. This information needs to be established and shared with the vendor, so they can work on meeting these standards. Agree on what to measure (e.g., percentage of orders delivered by their due date) and what the goal is (e.g., 95% on-time deliveries). These numbers should be reviewed at frequent intervals depending on the size of the spend (weekly, monthly, quarterly).

Idea Sourcing & Value Creation. Better profitability comes from ideas. You can greatly increase the number of good ideas by sourcing ideas from your vendors as well as from your employees. Some leading organizations have systematic processes in place to collect ideas from vendors, measure their impact, and reward for them.

Vendor Development . It's logical that when you improve the capabilities of your company's workforce, your company benefits. But even though vendors now do work once done in-house, that logic hasn't followed the work. Leading companies engage in vendor development - providing resources to improve their vendors' capabilities. This can be any collaboration that makes vendors more capable of delivering benefit to your company.

A Joint Review of Purchase Costs - If you work for a big company, you have a lot of buying power - buying power that may you may be able to leverage in a novel way. By jointly reviewing costs further down the supply chain, you may find opportunities where you can buy some goods and services your vendors need in order to serve you, but at a lower cost, and these savings can be passed on to you.

Adapted from: Are You Truly Managing Your Supplier Relationships? http://bit.ly/dcLyz0