Strategic sourcing<\/a> is a process for selecting the right vendor for your organization\u2019s needs. When strategic sourcing ends, vendor relationship management begins.<\/p>\n Vendor relationship management<\/a> is a combination of separate, but related, activities that are strategically coordinated. These activities help to maximize the value of your vendor selection. Here are four of the activities that comprise vendor relationship management.<\/p>\n 1. Measuring The Vendor\u2019s Performance<\/a>. You selected a vendor because you were convinced it would fulfill its promises. You put a contract in place to legally obligate the vendor to fulfill its promises. Shouldn\u2019t you confirm that the vendor is fulfilling its promises? Of course! And you do this by measuring the vendor\u2019s performance. The traditional vendor performance metrics are cost, delivery, service and quality. But leading organizations measure additional performance facets like innovation, social responsibility, and more.<\/p>\n 2. Collaborating With The Vendor. Simply accruing all of the cost savings you estimated when selecting the vendor doesn\u2019t maximize the value your organization can get out of the relationship. With strategic vendors, you should collaborate towards goals like: driving cost out of the shared supply chain, working towards joint process improvements and innovations, and exploring ways that both organizations can be more profitable by working as partners, rather than adversaries.<\/p>\n 3. Benchmarking The Vendor\u2019s Cost. Just because strategic sourcing identified your vendor as your best cost option in the marketplace at the time of selection doesn\u2019t mean that will be true in a year, three years, or five years. You should keep your finger on the pulse of the market by using tools like price indices, market intelligence subscriptions, and third party benchmarks to ensure that your vendor continues to remain competitive throughout the relationship.<\/p>\n 4. Re-evaluating The Vendor Relationship. Business conditions change. Always ensure that your vendor fits your current and future business needs, not just those needs in the past that may no longer be relevant. You can decide whether to disengage with the vendor, revisit the strategic sourcing process, or even remain with the current vendor for an even longer period of time.<\/p>\n Recommended Reading:<\/b><\/p>\n Recommended Course:<\/strong><\/p>\n NLPA Learning<\/b><\/a><\/span>:<\/b> Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in NLPA Learning<\/span><\/a>.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div> Members of the NLPA get great articles just like this by email every month. As a member, you will also get access to:<\/p>\n\n
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