4 Steps to Getting Started with Vendor Management
Paul Boone
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Before designing the roles and responsibilities of the VMO, you must first know the business and how current vendor relationships are managed.
Questions to ask:
To answer the above questions, I would suggest meeting with each functional area to discuss the questions above. This would also be the perfect time to set expectations on gathering all vendor documents, understand the services provided by the vendors, and be made aware of any current vendor incidents and active projects in the pipeline.
The VMO team provides a support role and assists each department with vendor selection, negotiations, contract terms, monitoring vendor performance, identifying risk and handling on-site reviews. Once you have your list of issues, vendors, documents and corporate structure, it's time to create a VMO implementation plan.
Each company will vary on what roles they want the VMO to be responsible for. The company may not have performed a deep dive into all aspects of what a VMO can provide. I would suggest gathering your data from Step 1 and putting a deck together to present to the executive team.
The deck should contain:
This is the perfect way to validate the business needs and to determine if your VMO vision meshes with the executive team's expectations.
After you analyze the company's current vendor management approach, you need to evaluate and prioritize what functions you can provide that will eliminate risks for the company and create efficiencies for the lines of business.
I call these the 22 keepsakes of a VMO:
Keep in mind the functions you commit to may require additional staff, depending on the company's volume of vendors.
Depending on the initial assessment of duties, you can start creating VMO roles and the set of tasks that each person will perform.
Among the roles you may consider are a contract administrator, a vendor analyst and a vendor auditor. Their typical responsibilities include:
Contract administrator
Vendor analyst
Vendor auditor
Another factor to consider is how to manage your documents, data and timelines. Building a spreadsheet can be overwhelming document for more than 100 vendors. Some things to keep in mind when planning what your database should have are:
You'll also need to determine how you'll manage all of the information and action items you'll be accumulating. Using a spreadsheet can work as a bare minimum solution, but it proves to be an inadequate solution once you have more than 100 vendor and/or need features like document storage and email reminders.
You'll want your VMO database to handle:
Now that you have the plan approved it's time to put everything together. Being in a support role it's imperative whatever you implement has to be simplistic for the business as well as efficient for the VMO. Whatever database you chose, ensure that the business has access to it so you can concentrate on your core functions to support the business.
In implementing any plan you should have policies and procedures for the company to follow and an internal VMO policy for your staff.
Implement your vendor management software or database as soon as possible. The last thing you want to have happen is for high volume or risk vendors contract to expire during this transition phase.
Once you have your policies and procedures published, a repository and tracking system and your staff hired, it’s time to officially kick off the VMO and introduce the policies and procedures and show present the value you will add to support the lines of business by managing vendor relationships and processes.
Depending on the company culture, you may wish to do a roadshow by starting with the department heads to get their buy in so they can trickle it down to their team, conducting continuing education, or email. I would suggest getting with your training department and see how they have rolled out new departments in the past.
Paul Boone is an experienced VMO manager. Connect with Paul on LinkedIn.