Maximize the Value of Vendor Relationships

Get more from your vendors than just a bill.

Onsite Workshop

Today, many organizations continue to manage vendors in an informal, ad hoc fashion, relying on the vendor to manage the relationship, resulting in:

  • Higher costs. Opportunities are missed to save money with service bundle discounts, economies of scale, and new and improved vendor offerings.
  • Increased probability of underperformance. Without a system in place to actively monitor vendor performance and communicate concerns, vendor failures are more likely to occur and be compensated for.
  • Difficulty resolving conflicts. It is difficult to overcome challenges without clear communication points and escalation pathways.

Creating an ongoing program for managing your vendor relationships allows you to:

  • Maximize the value of your vendor relationships based on your specific goals, expectations, and constraints.
  • Track vendors with meaningful and practical metrics that actually help improve vendor performance.
  • Navigate vendor-related risks and manage high-risk relationships appropriately.
  • Prioritize vendor relationships to optimize where you spend time and resources.

Module 1: Introduce Vendor Management and Assess Current State

The Purpose

Assess the current vendor management capability.

Key Benefits Achieved

Outlined the organization’s vendor portfolio and the current state of vendor management maturity.

Activities: Outputs:
1.1 Introduce vendor management and identify workshop goals.
  • Workshop goals
1.2 Map current vendor management processes.
  • Documented vendor management process maps
1.3 Assess maturity of vendor management processes.
  • Vendor management maturity assessment
1.4 Document your vendor inventory.
  • Documented current-state vendor inventory

Module 2: Design Target State and Perform a Risk Analysis

The Purpose

Determine what level of vendor management maturity is right for the organization and identify vulnerabilities to risk.

Key Benefits Achieved

  • Identified the targeted maturity of vendor management and structured a vendor management team to realize targeted maturity level.
  • Assessed the risk of individual vendors and established a holistic view of vendor risk. 

Activities: Outputs:
2.1 Determine target maturity of vendor management processes.
  • Target maturity determined for each vendor management process
2.2 Review vendor-associated risks.
2.3 Conduct a detailed risk assessment.
  • Documented and assessed vendor-related risks
2.4 Review and optimize vendor selection.
  • Vendor selection process map and action plan

Module 3: Optimize Vendor Contracting and Manage the Transition-In

The Purpose

Build contracts that mitigate against vendor risk and to create a repeatable program for onboarding vendors successfully.

Key Benefits Achieved

  • A balanced and well-prepared contract negotiation team.
  • An understanding of vendor risks, and contract strategies to mitigate those risks.
  • Comprehensive checklists of best practices to negotiate contracts with confidence.
  • Identification of transition managers and development of a consistent methodology to assign resources appropriately.
  • Development of sample transition plans and guidelines to minimize business disruption.
  • Prepared to lead a structured vendor kick-off meeting.  

Activities: Outputs:
3.1 Match elements of the contract to related vendor risks.
  • Vendor contract best-practice checklists
3.2 Calculate the total cost of ownership.
3.3 Determine transition managers and selection criteria.
3.4 Build service transition plans.
  • Sample best-practice service transition plans
3.5 Build a vendor kick-off agenda.
  • Vendor kick-off agenda
3.6 Document communication and escalation pathways.
  • Vendor escalation pathways

Module 4: Build Partnerships and Manage Vendor Performance

The Purpose

  • Transform high-priority vendor relationships into partnerships to achieve mutual benefits. 
  • Hold vendors accountable using assessment criteria that reflects the priorities of the organization, and then offboard vendors effectively.

Key Benefits Achieved

  • Vendor tiers and distinct vendor tier management plans.
  • A configurable scorecard with metrics that reflect the priorities of the organization.
  • A 360 degree collaborative scorecard.
  • Plans for improving underperformance and enforcing penalties.
  • An understanding of end-of-relationship risks and mitigation strategies.
  • A cutover strategy to smoothly transition to a new vendor with minimal risk.
  • Finalized Vendor Management Program Manual. 

Activities: Outputs:
4.1 Develop vendor assessment metrics.
4.2 Configure and use vendor assessment scorecard.
  • Customized internal scorecard
4.3 Customize 360 degree scorecard.
  • Customized 360 degree scorecard
4.4 Create a vendor performance improvement plan.
  • Vendor performance improvement plan
4.5 Brainstorm end-of-relationship risks & identify mitigation strategies.
4.6 Select a cutover strategy.
  • Finalized vendor management program manual

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Case Studies and Deliverables

Vendor Management Case Study of a Regional Grocery Chain

A lack of standardized vendor management process inhibited a grocery retailer from optimizing the value of its IT vendor portfolio and effectively managing risk in certain situations. To solve the problem, they targeted a moderate-to-high level of maturity to gain effectiveness while limiting unnecessary tasks that would slow efficiency.

Vendor Management Case Study of a Mid-Sized Electric Utility

A 13-person IT department in a small, regional, non-profit electric generation and transportation utility located in the eastern US managed over 50 vendors. While no major problems existed, the small team’s reliance on vendor support to deliver IT services demanded better vendor management process standardization in order to optimize the vendor portfolio and manage risk.

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