Vendor Selection & Vendor Management

It is possible to structure harmonious, continuously improving contractual relationships between purchasers and vendors. We believe in - and help our customers achieve - Collaborative Innovation. Successful partnerships and sourcing involve prepared purchasers using better techniques to find appropriate, experienced vendors. It also involves good purchasers and vendors creating great new products and services:

1. Invest time up-front in defining your organizational needs. Well-defined requirements help you determine whether you require outside help or can do the work in-house. If you do outsource, you'll have a foundation to determine what model best matches your project or program (a virtual team that you bring together, outsourcing entire IT functions to a single vendor, or a train the internal team approach). It also enables you to focus your efforts on those organizations or individuals with the experience, tools and technologies that best match your needs.
2. Solicit bids from a variety of prospects. It may seem obvious, but too often organizations facing a time or resource crunch go with a known vendor or existing relationship in order to hit the ground running more quickly. While this may save time up-front, and assuredly work well with the right vendor, you run the risk of a higher-cost, lower-value implementation if services or expertise are poorly matched to the need or you have no basis for cost comparison.
3. Price isn't everything. Yes, cost is and should be a critical component of vendor selection. But don't automatically select the vendor with the lowest price, assume that fixed-price is the best deal or negotiate your top-choice down to rock-bottom prices. Successful vendor relationships are about partnership: quality results for all parties involved. These are less likely to be obtained if your vendor is constantly watching his or her team's time or costs because you've negotiated the price so low it'll be hard for your partner to profit.
4. Spend the time to build conceptual agreement and document it in a clear contract. A carefully constructed contract can help bring up critical project issues early in the process, sow the seeds of cooperation, and serve as a reminder for project controls and management throughout the vendor relationship. Emphasize reasonable expectations and fluidity. At the very least, a solid contract expensive litigation. Don't focus on vendor selection to the exclusion of vendor management. Often significant organizational time and resources are devoted to the selection of the appropriate technology vendor. Remember that once the contract's in place, you've only just begun. Manage your vendor(s), focus on a relationship that allows you both to grow while delivering quality, measureable results.
5. Monitor and measure. Regular contact, project monitoring and measurement, often as a function of strong project management, help you maximize the effectiveness of your vendor relationships - and give you indicators as to whether to continue the relationship or move on before contract renewal time comes around. Remember that if the initial project or program succeeds, you may find yourself having to justify ongoing use of the vendor once budgeting time rolls around.
6. Define your partnership for long-term success. Look beyond SLAs (service level agreements) and contract fulfillment. Did the partnership bring value to your business? Was there a commensurate return on your investment? Have you established a collaborative working relationship that could be beneficial to future technology initiatives?

Yes, a strategic, collaborative partnership with vendors is possible, but it requires hard work and a cooperative approach. Studies show that a combination of innovative IT and a cooperative orientation toward vendors lead to better vendor performance and firm profitability.