Vendor Management

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 Presentation Outline

•Importance of Vendor Relationship Management

• The Required Foundation

• Supplier Segmentation

• Managing Supplier Relationships

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 The Vendor Management Lifecycle

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 What is Vendor Management

• Everything that occurs after you sign a contract and the

vendor starts delivering its product or service
• Strategic vendor management is the discipline of
generating additional value from vendors that have a
strategic impact on your business
• For those vendors with the strengths and resources that
align with your business and help grow it, focus on
building and sustaining a strategic relationship

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 Benefits of Strategic Vendor Mgt.

• More-qualified suppliers
• • More informed sourcing decisions
• • Lower total cost of ownership (TCO)
• • Reduced time to contract and execution
• • Increased buying leverage
• • Reduced time on administrative tasks
• • Early identification of performance issues
• • Visibility into total costs

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 Categorizing Vendors

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 How to Approach and Manage
Different Vendors

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 Vendor Types and
Relationship Continuum
• Tactical to Strategic:
• Tactical:
– Single or limited projects
– Application(s) not critical or central to business
– Application(s) easily replaced. Commodity product.
– Delivers good product and services but not an active
contributor to either business solutions or customer success
• Strategic:
– Mission-critical supplier
– Multiple projects/applications
– Highly-customized application(s)
– Committed and actively contributes to customer success

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 The Required Foundation

• Fully executed, comprehensive supplier agreement

– aligned objectives
– Clearly defined statement of work
– Measurable service expectations

• Effective Supplier Management Program

– Clearly defined measures
– Documented method of measurement
– Weighted individual measures
– Link to compensation

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 The Required Foundation

• Skilled Relationship Managers

– Managers of relationships (supplier/client), not functions
– Subject matter experts, credible
– Masters of communication
– Enablers (solution driven, not fault driven)
– Integral, honest and appropriately biased

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 Supplier Segmentation

• Segmentation Benefits
– Ensures optimal allocation of limited management time and
resources
– Helps determine what kind of relationship to develop for
different types of suppliers
– Ensures internal alignment re: supplier management roles,
responsibilities, actions
– Guides sourcing and negotiation strategy, relationship
management structure and supplier activity
– Helps clarify and manage supplier expectations

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 Supplier Segmentation

• Segmentation Criteria
– Degree of interdependence (customer/supplier)
– Level of spend
– Strategic importance of supplier
– Number of BUs served by a supplier
– Complexity and frequency of changes in supplier requirements
– Type and number of products or services a supplier provides
– Cost/difficulty of switching suppliers

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 Segmentation Model

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 Segmentation Implementation

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 Supplier Relationship Management

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 Good Relationship Characteristics

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 Vendor Mgmt- Best Practices
• Appropriate research and categorization of vendors
• Clear and concise communications with vendors at
appropriate levels
• Effective communications with all stakeholders
• Contracts that include appropriate terms & conditions
including metrics and SLAs. Understanding of leverage
points.
• Continuous monitoring of vendor performance and health
• Continual research and awareness of competitive offerings
• Implementing a formal and disciplined vendor management
program as opposed to focusing on event-driven activities

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 THANK YOU!

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5/14/2019