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Elevate Your Vendor Management Initiative

Transform your VMI from tactical to strategic to maximize its impact and value.

  • As cloud vendors, managed service providers, and other IT vendors continue to play a larger role in IT operations, the VMI must evolve to meet new challenges. Maximizing the VMI's impact requires it to keep pace with the IT landscape and transforming from tactical to strategic.
  • Increased spend with and reliance on vendors leads to less control and more risk for IT organizations. The VMI must mature on multiple fronts to continue adding value; staying stagnant is not an option.

Our Advice

Critical Insight

  • An organization’s vendor management initiative must continue to evolve and mature to reach its full strategic value. In the early stages, the vendor management initiative may be seen as transactional, focusing on the day-to-day functions associated with vendor management. The real value of a VMI comes from becoming strategic partner to other functional groups (departments) within your organization.
  • Developing vendor management personnel is critical to the vendor management initiative’s evolution and maturation. For the VMI to mature, its personnel must mature as well. Their professional skills, competencies, and knowledge must increase over time. Failure to accentuate personal growth within the team limits what the team is able to achieve and how the team is perceived.
  • Vendor management is not about imposing your will on vendors; it is about understanding the multi-faceted dynamics between your organization and your vendors and charting the appropriate path forward. Resource allocation and relationship expectations flow from these dynamics. Each critical vendor requires an individual plan to build the best possible relationship and to leverage that relationship. What works with one vendor may not work or even be possible with another vendor…even if both vendors are critical to your success.

Impact and Result

  • Evolve the VMI from tactical to strategic
  • Improve the VMI’s brand and brand awareness
  • Develop the VMI’s team members to increase the VMI’s impact
  • Take relationships to the next level with your critical vendors
  • Understand how your vendors view your organization as a customer
  • Create and implement plans to improve relationships with critical vendors
  • Create and implement plans to improve underperforming vendors

Elevate Your Vendor Management Initiative Research & Tools

Start here – read the Executive Brief

Read our concise Executive Brief to find out why you should continue to evolve and mature your vendor management initiative and to understand the additional elements of Info-Tech’s four-step cycle to running your vendor management initiative.

1. Plan

This phase helps the VMI stay focused and aligned by reviewing existing materials, updating the existing maturity assessment, and ensuring that the foundational elements of the VMI are up to date. The main outcomes from this phase are a current maturity assessment and updated or revised Plan documents.

2. Build

This phase helps you configure, create, and understand the tools and templates used to elevate the VMI. The main outcomes from this phase are a clear understanding of the tools that identify which vendors are important to you, tools and concepts to help you take key vendor relationships to the next level, and tools to help you evaluate and improve the VMI and its personnel.

3. Run

This phase helps you begin integrating the new tools and templates into the VMI’s operations. The main outcomes from this phase are guidance and the steps required to continue your VMI’s maturation and evolution.

4. Review

This phase helps the VMI stay aligned with the overall organization, stay current, and improve its strategic value as it evolves. The main outcomes from this phase are ways to advance the VMI’s strategic impact.


Workshop: Elevate Your Vendor Management Initiative

Workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.

Module 1: Plan and Build

The Purpose

Review existing tools and templates and configure new tools and templates.

Key Benefits Achieved

Updated Maturity Assessment and configured tools and templates.

Activities

Outputs

1.1

Existing Plan document review and new maturity assessment.

1.2

Optional classification models.

1.3

Customer positioning model.

1.4

Two-way scorecards.

  • Updated Plan documents.
  • New maturity assessment.
  • Configured classification model.
  • Customer positioning for top five vendors.
  • Configured scorecard and feedback form.

Module 2: Build and Run

The Purpose

Configure VMI Tools and Templates.

Key Benefits Achieved

Configured Tools and Templates for the VMI.

Activities

Outputs

2.1

Performance improvement plans (PIPs).

2.2

Relationship improvement plans (RIPs).

2.3

Vendor-at-a-Glance reports.

2.4

VMI Personnel Competency Evaluation Tool.

  • Configured Performance Improvement Plan.
  • Configured Relationship Assessment and Relationship Improvement Plan.
  • Configured 60-Second Report and completed Vendor Calendar for one vendor.
  • Configured VMI Personnel Competency Evaluation Tool.

Module 3: Build and Run

The Purpose

Continue configuring VMI Tools and Templates and enhancing VM competencies.

Key Benefits Achieved

Configured Tools and Templates for the VMI and market intelligence to gather.

Activities

Outputs

3.1

Internal feedback tool.

3.2

VMI ROI calculation.

3.3

Vendor recognition program.

3.4

Assess the Relationship Landscape.

3.5

Gather market intelligence.

3.6

Improve professional skills.

  • Configured Internal Feedback Tool.
  • General framework for a vendor recognition program.
  • Completed Relationship Landscape Assessment (representative sample).
  • List of market intelligence to gather for top five vendors.

Module 4: Run and Review

The Purpose

Improve the VMI’s brand awareness and impact on the organization; continue to maintain alignment with the overall organization.

Key Benefits Achieved

Raising the organization’s awareness of the VMI, and ensuring the VMI Is becoming more strategic.

Activities

Outputs

4.1

Expand professional knowledge.

4.2

Create brand awareness.

4.3

Investigate potential alliances.

4.4

Continue increasing the VMI’s strategic value.

4.5

Review and update (governances, policies and procedures, lessons learned, internal alignment, and leading practices).

  • Branding plan for the VMI.
  • Branding plan for individual VMI team members.

Elevate Your Vendor Management Initiative

Transform Your VMI From Tactical to Strategic to Maximize Its Impact and Value

EXECUTIVE BRIEF

Analyst Perspective

Transform your VMI into a strategic contributor to ensure its longevity.

The image contains a picture of Phil Bode.

By the time you start using this blueprint, you should have established a solid foundation for your vendor management initiative (VMI) and implemented many or all of the principles outlined in Info-Tech’s blueprint Jump Start Your Vendor Management (the Jump Start blueprint). This blueprint (the Elevate blueprint) is meant to continue the evolutionary or maturation process of your VMI. Many of the items presented here will build on and refer to the elements from the Jump Start blueprint. The goal of the Elevate blueprint is to assist in the migration of your VMI from transactional to strategic. Why? Simply put, the more strategic the VMI, the more value it adds and the more impact it has on the organization as a whole.

While the day-to-day, transactional aspect of running a VMI will never go away, getting stuck in transactional mode is a horrible place for the VMI and its team members:

  • The VMI will never live up to its potential.
  • The work won’t be enjoyable or rewarding for most people.
  • The VMI will be seen paper pushers, gatekeepers, and other things that don’t add value or should be avoided.
  • Being reactive (i.e. putting out fires all day) is exhausting and provides little or no control over the work and workflow.
  • Lastly, the VMI’s return on investment will be low, and unless it was established due to regulatory, audit, or other influences, the VMI could be disbanded. Minimal resources will be available to the VMI…just enough to keep it alive and obtain whatever checkmark needs to be earned to satisfy the original need for its creation.

To prevent these tragic things from happening, transform the VMI into a strategic contributor and partner internally. This Elevate blueprint provides a roadmap and guidance to get your journey started. Focus on expanding your understanding of customer/vendor dynamics, improving the skills, competencies, and knowledge of the VMI’s team members, contributing value beyond the savings aspect, and building a solid brand internally and with your vendors. This requires a conscious effort and a proactive approach to vendor management…not to mention treating your internal “clients” with respect and providing great customer service.

At the end of the day, ask yourself one question: If your internal clients had to pay for your services, would they? If you can answer yes, you are well on your way to being strategic. If not, you still have some work to do. Long live the strategic VMI!

Phil Bode
Principal Research Director, Vendor Management
Info-Tech Research Group

Executive Summary

Your Challenge

Common Obstacles

Info-Tech’s Approach

Each year, IT organizations “outsource” tasks, activities, functions, and other items. During 2021:

  • Spend on as-a-service providers increased 38% over 2020.*
  • Spend on managed service providers increased 16% over 2020.*
  • IT service providers increased their merger and acquisition numbers by 47% over 2020.*

This leads to more spend, less control, and more risk for IT organizations. Managing this becomes a higher priority for IT, but many IT organizations are ill-equipped to do this proactively.

As new contracts are negotiated and existing contracts are renegotiated or renewed, there is a perception that the contracts will yield certain results, output, performance, solutions, or outcomes. The hope is that these will provide a measurable expected value to IT and the organization. Often, much of the expected value is never realized. Many organizations don’t have a VMI to help:

  • Ensure at least the expected value is achieved.
  • Improve on the expected value through performance management.
  • Significantly increase the expected value through a proactive VMI.

Vendor Management is a proactive, cross-functional lifecycle. It can be broken down into four phases:

  • Plan
  • Build
  • Run
  • Review

The Info-Tech process addresses all four phases and provides a step-by-step approach to configure and operate your VMI. The content in this blueprint helps you and the VMI evolve to add value and impact to the organization that was started with the Info-Tech blueprint Jump Start Your VMI.

Info-Tech Insight

The VMI must continue to mature and evolve, or it will languish, atrophy, and possibly be disbanded.

  • A transactional approach to vendor management ignores the multi-faceted dynamics in play and limits the VMI’s potential value.
  • Improving the VMI’s impact starts with the VMI’s personnel – their skills, knowledge, competencies, and relationships.
  • Adding value to the organization requires time to build trust and understand the landscape (internal and external).
*Source: Information Services Group, Inc., 2022.

Executive Summary

Your Challenge

Spend on managed service providers and as-a-service providers continues to increase. In addition, IT services vendors continue to be active in the mergers and acquisitions arena. This increases the need for a VMI to help with the changing IT vendor landscape.

38%

2021

16%

2021

47%

2021

Spend on

As-a-Service Providers

Spend on

Managed Services

Providers

IT Services

Merger & Acquisition

Growth

(Transactions)

Source: Information Services Group, Inc., 2022.

Executive Summary

Common Obstacles

When organizations execute, renew, or renegotiate a contract, there is an “expected value” associated with that contract. Without a robust VMI, most of the expected value will never be realized. With a robust VMI, the realized value significantly exceeds the expected value during the contract term.

The image contains a screenshot of a diagram that demonstrates the expected value of a contract with and without a vmi.

Source: Based on findings from Geller & Company, 2003.

Executive Summary

Info-Tech’s Approach

A sound, cyclical approach to vendor management will help ensure your VMI meets your needs and stays in alignment with your organization as they both change (i.e. mature and evolve).

Vendor Management Process

  1. Plan
    • Review and Update Existing Plan Materials
  2. Build
    • Vendor Classification Models
    • Customer Positioning Model
    • 2-Way Scorecards
    • Performance Improvement Plan (PIP)
    • Relationship Improvement Plan (RIP)
    • Vendor-at-a-Glance Reports
    • VMI Personnel Competency Evaluation Tool
    • Internal Feedback Tool
    • VMI ROI Calculation Tools
    • Vendor Recognition Program
  3. Run
    • Classify Vendors and Identify Customer Position
    • Assess the Relationship Landscape
    • Leverage 2-Way Scorecards
    • Implement PIPs and RIPS
    • Gather Market Intelligence
    • Generate Vendor-at-a-Glance Reports
    • Evaluate VMI Personnel
    • Improve Professional Skills
    • Expand Professional Knowledge
    • Create Brand Awareness
    • Survey Internal Clients
    • Calculate VMI ROI
    • Implement Vendor Recognition Program
  4. Review
    • Investigate Potential Alliances
    • Continue Increasing the VMI's Strategic Value
    • Review and Update Governances
  • Outcomes
    • Better Allocation of VMI Resources
    • Measurable Impact of the VMI
    • Increased Awareness of the VMI
    • Improved Vendor Performance
    • Improved Vendor Relationships
    • VMI Team Member Development
    • Strategic Relationships Internally

Info-Tech’s Methodology for Elevating Your VMI

Phase 1 - Plan

Phase 2 - Build

Phase 3 - Run

Phase 4 – Review

Phase Steps

1.1 Review and Update Existing Plan Materials

2.1 Vendor Classification Models

2.2 Customer Positioning Model

2.3 Two-Way Scorecards

2.4 Performance Improvement Plan (PIP)

2.5 Relationship Improvement Plan (RIP)

2.6 Vendor-at-a-Glance Reports

2.7 VMI Personnel Competency Evaluation Tool

2.8 Internal Feedback Tool

2.9 VMI ROI Calculation

2.10 Vendor Recognition Program

3.1 Classify Vendors & Identify Customer Position

3.2 Assess the Relationship Landscape

3.3 Leverage Two-Way Scorecards

3.4 Implement PIPs and RIPs

3.5 Gather Market Intelligence

3.6 Generate Vendor-at-a-Glance Reports

3.7 Evaluate VMI Personnel

3.8 Improve Professional Skills

3.9 Expand Professional Knowledge

3.10 Create Brand Awareness

3.11 Survey Internal Clients

3.12 Calculate VMI ROI

3.13 Implement Vendor Recognition Program

4.1 Investigate Potential Alliances

4.2 Continue Increasing the VMI’s Strategic Value

4.3 Review and Update

Phase Outcomes

This phase helps the VMI stay focused and aligned by reviewing existing materials, updating the existing maturity assessment, and ensuring that the foundational elements of the VMI are up-to-date.

This phase helps you configure, create, and understand the tools and templates used to elevate the VMI.

This phase helps you begin integrating the new tools and templates into the VMI’s operations.

This phase helps the VMI stay aligned with the overall organization, stay current, and improve its strategic value as it evolves.

Insight Summary

Insight 1

An organization’s vendor management initiative must continue to evolve and mature to reach its full strategic value. In the early stages, the vendor management initiative may be seen as transactional, focusing on the day-to-day functions associated with vendor management. The real value of a VMI comes from becoming strategic partner to other functional groups (departments) within your organization.

Insight 2

Developing vendor management personnel is critical to the vendor management initiative’s evolution and maturation. For the VMI to mature, its personnel must mature as well. Their professional skills, competencies, and knowledge must increase over time. Failure to accentuate personal growth within the team limits what the team can achieve and how the team is perceived.

Insight 3

Vendor management is not about imposing your will on vendors; it is about understanding the multifaceted dynamics between your organization and your vendors and charting the appropriate path forward. Resource allocation and relationship expectations flow from these dynamics. Each critical vendor requires an individual plan to build the best possible relationship and to leverage that relationship. What works with one vendor may not work or even be possible with another vendor – even if both vendors are critical to your success.

Blueprint Deliverables

The four phases of maturing and evolving your vendor management initiative are supported with configurable tools, templates, and checklists to help you stay aligned internally and achieve your goals.

VMI Tools and Templates

Continue building your foundation for your VMI and configure tools and templates to help you manage your vendor relationships.

The image contains screenshots of the VMI Tools and Templates.

Key Deliverables:

Info-Tech’s

  1. Elevate – COST Model Vendor Classification Tool
  2. Elevate – MVP Model Vendor Classification Tool
  3. Elevate – OPEN Model Customer Positioning Tool
  4. Elevate – Relationship Assessment and Improvement Plan Tool
  5. Elevate – Tools and Templates Compendium

A suite of tools and templates to help you upgrade and evolve your vendor management initiative.

Blueprint benefits

IT Benefits

Business Benefits

  • Improve VMI performance and value.
  • Improve VMI team member performance.
  • Build better relationships with critical vendors.
  • Measure the impact and contributions provided by the VMI.
  • Establish realistic and appropriate expectations for vendor interactions.
  • Understand customer positioning to allocate vendor management resources more effectively and more efficiently.
  • Improve vendor accountability.
  • Increase collaboration between departments.
  • Improve working relationships with your vendors.
  • Create a feedback loop to address vendor/customer issues before they get out of hand or are more costly to resolve.
  • Increase access to meaningful data and information regarding important vendors.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

Guided Implementation

Workshop

Consulting

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.” “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.” “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.” “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

What does a typical GI on this topic look like?

Phase 1 Phases 2 and 3 Phase 4

Call #1: Review status of existing plan materials.

Call #2: Conduct a new maturity assessment.

Call #3: Review optional classification models.

Call #4: Determine customer positioning for top vendors.

Call #5: Configure vendor Scorecards and vendor feedback forms.

Call #6: Discuss PIPs, RIPs, and vendor-at-a-glance reports.

Call #7: VMI personnel competency evaluation tool.

Call #8: Create internal feedback tool and discuss ROI.

Call #9: Identify vendor recognition program attributes and assess the relationship landscape.

Call #10: Gather market intelligence and create brand awareness.

Call #11: Identify potential vendor alliances, review the components of a strategic VMI, and discuss the continuous improvement loop.

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is between 6 to 12 calls over the course of 3 to 6 months.

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

Day 1

Day 2

Day 3

Day 4

Plan/Build Run

Build/Run

Build/Run

Run/Review

Activities

1.1 Existing Plan document review and new maturity assessment.

1.2 Optional classification models.

1.3 Customer positioning model.

1.4 Two-way scorecards.

2.1 Performance improvement plans (PIPs).

2.2 Relationship improvement plans (RIPs).

2.3 Vendor-at-a-glance reports.

2.4 VMI personnel competency evaluation tool.

3.1 Internal feedback tool.

3.2 VMI ROI calculation.

3.3 Vendor recognition program.

3.4 Assess the relationship landscape.

3.5 Gather market intelligence.

3.6 Improve professional skills.

4.1 Expand professional knowledge.

4.2 Create brand awareness.

4.3 Investigate potential alliances.

4.4 Continue increasing the VMI’s strategic value.

4.5 Review and update (governances, policies and procedures, lessons learned, internal alignment, and leading practices).

Deliverables

  1. Updated plan documents.
  2. New maturity assessment.
  3. Configured classification model.
  4. Customer positioning for top 5 vendors.
  5. Configured scorecard and feedback form.
  1. Configured performance improvement plan.
  2. Configured relationship assessment and relationship improvement plan.
  3. Configured 60-second report and completed vendor calendar for one vendor.
  4. Configured VMI personnel competency evaluation tool.
  1. Configured internal feedback tool.
  2. General framework for a vendor recognition program.
  3. Completed relationship landscape assessment (representative sample).
  4. List of market intelligence to gather for top 5 vendors.
  1. Roadmap/plan for improving skills and knowledge for VMI personnel.
  2. Action plan for creating brand awareness for the VMI.
  3. Action plan for creating brand awareness for each VMI team member.

Using complementary vendor management blueprints

Jump Start Your VMI and Elevate Your VMI

The image contains a screenshot to demonstrate using complementary vendor management blueprints.

Phase 1 – Plan

Look to the Future and Update Existing Materials

Phase 1

Phase 2

Phase 3

Phase 4

1.1 Review and update existing Plan materials

2.1 Vendor classification models

2.2 Customer positioning model

2.3 Two-way scorecards

2.4 Performance improvement plan (PIP)

2.5 Relationship improvement plan (RIP)

2.6 Vendor-at-a-glance reports

2.7 VMI personnel competency evaluation tool

2.8 Internal feedback tool

2.9 VMI ROI calculation

2.10 Vendor recognition program

3.1 Classify vendors and identify customer position

3.2 Assess the relationship landscape

3.3 Leverage two-way scorecards

3.4 Implement PIPs and RIPs

3.5 Gather market intelligence

3.6 Generate vendor-at-a-glance reports

3.7 Evaluate VMI personnel

3.8 Improve professional skills

3.9 Expand professional knowledge

3.10 Create brand awareness

3.11 Survey internal clients

3.12 Calculate VMI ROI

3.13 Implement vendor recognition program

4.1 Investigate potential alliances

4.2 Continue increasing the VMI’s strategic value

4.3 Review and update

This phase will walk you through the following activities:

This phase helps the VMI stay focused and aligned by reviewing existing materials, updating the existing maturity assessment, and ensuring that the foundational elements of the VMI are up-to-date. The main outcomes from this phase are a current maturity assessment and updated or revised Plan documents.

This phase involves the following participants:

  • VMI team
  • Applicable stakeholders and executives
  • Procurement/Sourcing
  • IT
  • Others as needed

Phase 1 – Plan

Phase 1 – Plan revisits the foundational elements from the Info-Tech blueprint Jump Start Your Vendor Management Initiative. As the VMI continues to operate and mature, looking backward periodically provides a new perspective and helps the VMI move forward:

  • Has anything changed (mission statement, goals, scope, strengths and obstacles, roles and responsibilities, and process mapping)?
  • What progress was made against the maturity assessment?
  • What is next in the maturity process for the VMI?
  • Were some foundational elements overlooked or not done thoroughly due to time constraints, a lack of knowledge, or other factors?

Keep an eye on the past as you begin looking toward the future.

Step 1.1 – Review and update existing Plan materials

Ensure existing materials are current

At this point, the basic framework for your VMI should be in place. However, now is a good time to correct any oversights in your foundational elements. Have you:

  • Drafted a mission statement for the VMI and listed its goals, answering the questions “why does the VMI exist” and “what will it achieve”?
  • Determined the VMI’s scope, establishing what is in and outside the purview of the VMI?
  • Listed the VMI’s strengths and obstacles, identifying what you can leverage and what needs to be managed to ensure smooth sailing?
  • Established roles and responsibilities (OIC Chart) for the vendor management lifecycle, defining each internal party’s place in the process?
  • Documented process maps, delineating (at a minimum) what the VMI is doing for each step of the vendor management lifecycle?
  • Created a charter, establishing an operational structure for the VMI?
  • Completed a vendor inventory, identifying the major vendors included in the VMI?
  • Conducted a VMI maturity assessment, establishing a baseline and desired future state to work toward?
  • Defined the VMI’s structure, documenting the VMI’s place in the organization, its services, and its clients?

If any of these elements is missing, revisit the Info-Tech blueprint Jump Start Your Vendor Management Initiative to complete these components. If they exist, review them and make any required modifications.

Download the Info-Tech blueprint Jump Start Your Vendor Management Initiative

1.1.1 – Review and update existing Plan materials

1 – 6 Hours

  1. Meet with the participants and review existing documents and tools created or configured during Phase 1 of the Info-Tech blueprint Jump Start Your Vendor Management Initiative: mission statement and goals, scope, strengths and obstacles, OIC chart, process maps, charter, vendor inventory, maturity assessment, and structure.
  2. Update the documents as needed.
  3. Redo the maturity assessment if more than 12 months have passed since the initial assessment was conducted.
Input Output
  • Documents and tools from Phase 1 of the Info-Tech blueprint Jump Start Your Vendor Management Initiative
  • Updated documents and tools from Phase 1 of the Info-Tech blueprint Jump Start Your Vendor Management Initiative
Materials Participants
  • Documents and tools from Phase 1 of the Info-Tech blueprint Jump Start Your Vendor Management Initiative
  • Whiteboard or flip charts (as needed)
  • VMI team
  • Applicable stakeholders and executives (as needed)

Download the Info-Tech blueprint Jump Start Your Vendor Management Initiative

Download the Jump - Phase 1 Tools and Templates Compendium

Phase 2 – Build

Create New Tools and Consider Alternatives to Existing Tools

Phase 1

Phase 2

Phase 3

Phase 4

1.1 Review and update existing Plan materials

2.1 Vendor classification models

2.2 Customer positioning model

2.3 Two-way scorecards

2.4 Performance improvement plan (PIP)

2.5 Relationship improvement plan (RIP)

2.6 Vendor-at-a-glance reports

2.7 VMI personnel competency evaluation tool

2.8 Internal feedback tool

2.9 VMI ROI calculation

2.10 Vendor recognition program

3.1 Classify vendors and identify customer position

3.2 Assess the relationship landscape

3.3 Leverage two-way scorecards

3.4 Implement PIPs and RIPs

3.5 Gather market intelligence

3.6 Generate vendor-at-a-glance reports

3.7 Evaluate VMI personnel

3.8 Improve professional skills

3.9 Expand professional knowledge

3.10 Create brand awareness

3.11 Survey internal clients

3.12 Calculate VMI ROI

3.13 Implement vendor recognition program

4.1 Investigate potential alliances

4.2 Continue increasing the VMI’s strategic value

4.3 Review and update

This phase will walk you through the following activities:

This phase helps you configure, create, and understand the tools and templates used to elevate the VMI. The main outcomes from this phase are a clear understanding of the tools that identify which vendors are important to you, tools and concepts to help you take key vendor relationships to the next level, and tools to help you evaluate and improve the VMI and its personnel.

This phase involves the following participants:

  • VMI team
  • Applicable stakeholders and executives
  • Legal
  • Marketing
  • Others as needed

Phase 2 – Build

Create and configure tools, templates, and processes

Phase 2 – Build is similar to its counterpart in the Info-Tech blueprint Jump Start Your Vendor Management Initiative; this phase focuses on tools, templates, and concepts that help the VMI increase its strategic value and impact. The items referenced in this phase will require your customization or configuration to integrate them within your organization and culture for maximum effect.

One goal of this phase is to provide new ways of looking at things and alternate approaches. (For example, two methods of classifying your vendors are presented for your consideration.) You don’t live in a one-size-fits-all world, and options allow you (or force you) to evaluate what’s possible rather than running with the herd. As you review this phase, keep in mind that some of the concepts presented may not be applicable in your environment…or it may be that they just aren’t applicable right now. Timing, evolution, and maturity will always be factors in how the VMI operates.

Another goal of this phase is to get you thinking about the value the VMI brings to the organization, and just as important, how to capture and report it. Money alone may be at the forefront of most people’s minds when return on investment is brought up, but there are many ways to measure a VMI’s value and impact. This Phase will help you in your pursuit.

Lastly, a VMI must focus on its internal clients, and that starts with the VMI’s personnel. The VMI is a reflection of its team members – what they do, say, and know will determine how the VMI is perceived…and used.

Step 2.1 – Vendor classification model

Determine which classification model works best for your VMI

The classification model in the Info-Tech blueprint Jump Start Your Vendor Management Initiative is simple and easy to use. It provides satisfactory results for the first one or two years of the VMI’s life. After that, a more sophisticated model should be used, one with more parameters or flexibility to accommodate the VMI’s new maturity.

Two models are presented on the following pages. The first is a variation of the COST model used in the Jump Start Your Vendor Management Initiative blueprint. The second is the MVP model, which segments vendors into three categories instead of four and eliminates the 50/50 allocation constraint inherent in a 2x2 model.

Step 2.1 – Vendor classification model

Configure the COST Vendor Classification Tool

The image contains a screenshot of the COST classification model.

If you used the COST classification model in the Jump Start Your Vendor Management Initiative blueprint, you are familiar with its framework: vendors are plotted into a 2x2 matrix based on their spend and switching costs and their value to your operation. The simple variation of this model uses three variables to assess the vendor’s value to your operation and two variables to determine the vendor’s spend and switching cost implications.

The COST classification model presented here sticks to the same basic tenets but adds to the number of variables used to plot a vendor’s position within the matrix. Six variables are used to define a vendor’s value and three variables are used to set the spend and switching cost. This provides greater latitude in identifying what makes a vendor important to you.

Step 2.1 – Vendor classification model

Configure the MVP Vendor Classification Tool

The image contains a screenshot example of the MVP clsssification tool.

Another option for classifying vendors is the MVP classification model. In this model, vendors fall into one of three categories: minor, valued, or principal. Similar to the COST vendor classification model, the MVP classification model requires a user to evaluate statements or questions to assess a vendor’s importance to the organization. In the MVP approach, each question/statement is weighted, and the potential responses to each question/statement are assigned points (100, 33, or 10) based on their impact. Multiplying the weight (expressed as a percentage) for each question/statement by the response points for each question/statement yields a line-item score. The total number of points obtained by a vendor determines its classification category. A vendor receiving a score of 75 or greater would be a principal vendor (similar to a strategic vendor under the COST model); 55 to 74 points would be a valued vendor (similar to operational or tactical vendor); less than 55 points would be a minor vendor (similar to a commodity vendor).

Step 2.1 – Vendor classification model

Which classification model is best?

By now, you may be asking yourself, “Which model should I use? What is the advantage of the MVP model?” Great questions! Both models work well, but the COST model has a limitation inherent in any basic 2x2 model. Since two axes are used in a 2x2 approach, the effective weighting for each axis is 50%. As a result, the weights assigned to an individual element are reduced by 50%. A simple but extreme example will help clarify this issue (hopefully).

Suppose you wanted to use an element such as How integrated with our business processes are the vendor's products/services? and weighted it 100%. Under the 2x2 matrix approach, this element only moves the X-axis score; it has no impact on the Y-axis score. The vendor in this hypothetical could max out the X-axis under the COST model, but additional elements would be needed for the vendor to rise from the tactical quadrant to the strategic quadrant. In the MVP model, if the vendor maxed out the score on that one element (at 100%), the vendor would be at the top of the pyramid and would be a principal vendor.

One model is not necessarily better than the other. Both provide an objective way for you to determine the importance of your vendors. However, if you are using elements that don’t fit neatly into the two axes of the COST model, consider using the MVP model. Play with each and see which one works best in your environment, knowing you can always switch at a later point.

2.1.1 – COST Model Vendor Classification Tool

15 – 45 Minutes

  1. Meet with the participants to decide whether you want to use this model or the MVP model (see next page); if you choose this model, configure it for your environment by reviewing Elevate – COST Model Vendor Classification Tool – Tab 2. Set Parameters.
    1. Review the questions in column C for each axis (items 1-9), the weights in column D, and the answers/descriptors for each question (columns E, F, G, and H). Make any adjustments necessary to fit your culture, environment, and goals.
    2. Using the Jump Start Your Vendor Management blueprint tool Jump - Phase 1 Tools and Templates Compendium – Tab 1.7 Vendor Inventory, sort your vendors by spend; if you used multiple line items for a vendor in the Vendor Inventory Tool, aggregate the spend data for this activity.
    3. Adjust the descriptors and values in row 16 (Item 7) to match your actual data. General guidance for establishing the spend ranges is provided in the tool itself.
  2. No other modifications should be made to the parameters.
Input Output
  • Jump - Phase 1 Tools and Templates Compendium – Tab 1.7 Vendor Inventory from the blueprint Jump Start Your Vendor Management Initiative
  • Configured COST Model Vendor Classification Tool
Materials Participants
  • Elevate – Cost Model Vendor Classification Tool – Tab 2. Set Parameters
  • VMI team

Download the Info-Tech Elevate - COST Model Vendor Classification Tool

2.1.2 – MVP Model Vendor Classification Tool

15 – 45 Minutes

  1. Meet with the Participants to decide whether you want to use this model or the COST Model (see previous page); if you choose this model, configure it for your environment by reviewing Elevate – MVP Model Vendor Classification Tool – Tab 2. Set Parameters.
  2. Review the questions in column C (Items 1 - 7 ), the answers/descriptors for each question (columns D, E, and F), and the weights in column G. Make any adjustments necessary to fit your culture, environment, and goals.
  3. For the answers/descriptors use words and phrases that resonate with your audience and are as intuitive as possible.
  4. If you use annualized spend as an element, general guidance for establishing the spend ranges is provided in the tool itself.
  5. When assigning a weight value to a question, refrain from going below 5%; weights below this threshold will have minimal to no impact on a vendor's score.
InputOutput
  • Jump - Phase 1 Tools and Templates Compendium – Tab 1.7 Vendor Inventory from the Info-Tech blueprint Jump Start Your Vendor Management Initiative
  • Configured MVP Model Vendor Classification Tool
MaterialsParticipants
  • Elevate – MVP Model Vendor Classification Tool – Tab 2. Set Parameters
  • VMI team

Download the Info-Tech Elevate – MVP Model Vendor Classification Tool

Step 2.2 – Customer positioning model

Identify how the vendors view your organization

The image contains a screenshot of the customer positioning model.

Now that you have configured your choice of vendor classification model (or decided to stick with your original model), it’s time to think about the other side of the coin: How do your vendors view your organization. Why is this important? Because the VMI will have only limited success if you are trying to impose your will on your vendors without regard for how they view the relationship from their perspective. For example, if the vendor is one of your strategic (COST Model) or principal (MVP Model) vendors, but you don’t spend much money with them, you are difficult to work with, and there is no opportunity for future growth, you may have a difficult time getting the vendor to show up for BAMs (business alignment meetings), caring about scorecards, or caring about the relationship period.

Our experience at Info-Tech interacting with our members through vendor management workshops, guided implementations, and advisory calls has led us to a significant conclusion on this topic: Most customers tend to overvalue their importance to their vendors. To open your eyes about how your vendors actually view your account, use Info-Tech’s OPEN Model Customer Positioning Tool. (It is based on the supplier preferencing model pioneered by Steele & Court in 1996 in which the standard 2x2 matrix tool for procurement [and eventually vendor management] was repurposed to provide insights from the vendor’s perspective.) For our purposes, think of the OPEN model for customer positioning as a mirror’s reflection of the COST model for vendor classification. The OPEN model provides a more objective way to determine your importance to your vendors. Ultimately, your relationship with each vendor will be plotted into the 2x2 grid, and it will indicate whether your account is viewed as an opportunity, preferred, exploitable, or negligible.

*Adapted from Profitable Purchasing Strategies by Paul T. Steele and Brian H. Court

Step 2.3 – Two-way scorecards

Design a two-way feedback loop with your vendors

The image contains a screenshot example of the otwo-way feedback loop with vendors.

As with the vendor classification models discussed in Step 2.1, the two-way scorecards presented here are an extension of the scorecard and feedback material from the Jump Start Your Vendor Management Initiative blueprint.

The vendor scorecard in this blueprint provides additional flexibility and sophistication for your scorecarding approach by allowing the individual variables (or evidence indicators) within each measurement category to be evaluated and weighted. (The prior version only allowed the evaluation and weighting at the category level.)

On the vendor feedback side, the next evolution is to formalize the feedback and document it in its own scorecard format rather than continuing to list questions in the BAM agenda. The vendor feedback template included with this blueprint provides a sample approach to quantifying the vendor’s feedback and tracking the information.

The fundamentals of scorecarding remain the same:

  • Keep your eye on what is important to you.
  • Limit the number of measurement categories and evidence indicators to a reasonable and manageable number.
  • Simple is almost always better than complicated.

2.3.1 – Two-way scorecards (vendor scorecard)

15 – 60 Minutes

  1. Meet with the participants to configure the scorecard from Elevate – Tools and Templates Compendium – Tab 2.3.1 Vendor Scorecard to meet your needs:
    1. Review the measurement categories and criteria and modify as needed.
    2. Weight the measurement categories (Column E) according to their relative importance to each other; make sure the total adds up to 100%.
    3. Weight the measurement criteria (Column D) within each measurement category according to their relative importance to each other; make sure the total adds up to 100%.
  2. As a reminder, the vendor scorecard is for the vendor overall, not for a specific contract.
  3. You can create variations of the scorecard based on vendor categories (e.g. hardware, software, cloud, security, telecom), but avoid the temptation of creating vendor-specific scorecards unless the vendor is unique; conversely, you may want to create two or more scorecards for a vendor that crosses categories (one for each category).
InputOutput
  • Elevate – Tools and Templates Compendium – Tab 2.3.1 Vendor Scorecard
  • Brainstorming
  • Configured vendor scorecards
MaterialsParticipants
  • Elevate – Tools and Templates Compendium – Tab 2.3.1 Vendor Scorecard
  • VMI team

Download the Info-Tech Elevate – Tools and Templates Compendium

2.3.2 – Two-way scorecards (vendor feedback form)

15 – 60 Minutes

  1. Meet with the participants to configure the feedback form from Elevate – Tools and Templates Compendium – Tab 2.3.2 Vendor Feedback Form to meet your needs:
    1. Review the measurement categories and criteria and modify as needed.
    2. Weight the measurement categories (Column E) according to their relative importance to each other; make sure the total adds up to 100%.
    3. Weight the measurement criteria (Column D) within each measurement category according to their relative importance to each other; make sure the total adds up to 100%.
  2. As a reminder, the vendor feedback form is for the relationship overall and not for a specific contract.
  3. You can create variations of the feedback form based on vendor categories (e.g. hardware, software, cloud, security, telecom), but avoid the temptation of creating vendor-specific feedback forms unless the vendor is unique; conversely, you may want to create two or more feedback forms for a vendor that crosses categories and you work with different account management teams (one for each team).
InputOutput
  • Elevate – Tools and Templates Compendium – Tab 2.3.2 Vendor Feedback Form
  • Brainstorming
  • Configured vendor feedback forms
MaterialsParticipants
  • Elevate – Tools and Templates Compendium – Tab 2.3.2 Vendor Feedback Form
  • VMI team

Download the Info-Tech Elevate – Tools and Templates Compendium

Step 2.4 – Performance improvement plan (PIP)

Design your template to help underperforming vendors

It is not uncommon to see performance dips from even the best vendors. However, when poor performance becomes a trend, the vendor manager can work with the vendor to create and implement a performance improvement plan (PIP).

Performance issues can come from a variety of sources:

  • Contractual obligations.
  • Scorecard items.
  • Compliance issues not specified in the contract.
  • Other areas/expectations not covered by the scorecard or contract (e.g. vendor personnel showing up late for meetings, vendor personnel not being adequately trained, vendor personnel not being responsive).

PIPs should focus on at least a few key areas:

  • The stated performance in the contract or the expected performance.
  • The actual performance provided by the vendor.
  • The impact of the vendor’s poor performance on the customer.
  • A corrective action plan, including steps to be taken by the vendor and due dates and/or review dates.
  • The consequences for not improving the performance level.

Info-Tech Insight

PIPs are most effective when the vendor is an operational, strategic, or tactical vendor (COST model) or a principal or valued vendor (MVP model) and when you are an opportunity or preferred customer (OPEN model).

2.4.1 – Performance improvement plan (PIP)

15 – 30 Minutes

  1. Meet with the participants to review the two options for PIPs: Elevate – Tools and Templates Compendium – Tabs 2.4.1 and 2.4.2. Decide whether you want to use one or both options.
  2. Modify, add, or delete elements from either or both options to meet your needs.
  3. If you want to add signature lines for acknowledgement by the parties or other elements that may have legal implications, check with your legal advisors.
InputOutput
  • Elevate – Tools and Templates Compendium - Tabs 2.4.1 and 2.4.2
  • Brainstorming
  • Configured performance improvement plan templates
MaterialsParticipants
  • Elevate – Tools and Templates Compendium - Tabs 2.4.1 and 2.4.2
  • VMI team

Download the Info-Tech Elevate – Tools and Templates Compendium

Step 2.5 – Relationship improvement plan (RIP)

Identify key relationship indicators for your vendors

Relationships are often taken for granted, and many faulty assumptions are made by both parties in the relationship: good relationships will stay good, bad relationships will stay bad, and relationships don’t require any work. In the vendor management space, these assumptions can derail the entire VMI and diminish the value added to your organization by vendors.

To complicate matters, relationships are multi-faceted. They can occur:

  • On an organization-to-organization, working level.
    • Do your roadmaps align with the vendors?
    • Do the parties meet their contractual obligations?
    • Do the parties meet their day-to-day requirements (meetings, invoices, responses to inquiries)?
  • On an individual, personnel-to-personnel basis.
    • Do you have a good relationship with the account manager?
    • Does your project manager work well with the vendor’s project manager?
    • Do your executives have good relationships with their counterparts at the vendor?

Improving or maintaining a relationship will not happen by accident. There must be a concerted effort to achieve the desired results (or get as close as possible). A relationship improvement plan can be used to improve or maintain a relationship with the vendor and the individuals who make up the vendor’s organization.

Step 2.5 – Relationship improvement plan (RIP)

Identify key relationship indicators for your vendors (continued)

Improving relationships (or even maintaining them) requires a plan. The first step is to understand the current situation: Is the relationship good, bad, or somewhere in between? While the analysis will be somewhat subjective, it can be made more objective than merely thinking about relationships emotionally or intuitively. Relationships can be assessed based on the presence and quality of certain traits, factors, and elements. For example, you may think communication is important in a relationship. However, that is too abstract and subjective; to be more objective, you would need to identify the indicators or qualities of good communication. For a vendor relationship, they might include (but wouldn’t necessarily be limited to):

  • Vendor communication is accurate and complete.
  • Vendor personnel respond to inquiries on a timely basis.
  • Vendor personnel communications are easy to understand.
  • Vendor personnel communicate with you in your preferred manner (text, email, phone).
  • Vendor personnel discuss the pros and cons of vendor products/services being presented.

Evaluating these statements on a predefined and consistent scale establishes the baseline necessary to conduct a gap analysis. The second half of the equation is the future state. Using the same criteria, what would or should the communication component look like a year from now? After that is determined, a plan can be created to improve the deficient areas and maintain the acceptable areas.

Although this example focused on one category, the same methodology can be used for additional categories. It all starts with the simple question that requires a complex answer, “What traits are important to you and are indicators of a good relationship?”

2.5.1 – Relationship Improvement Plan (RIP)

15 – 60 Minutes

  1. Meet with the participants to configure the relationship indicators in Elevate – Relationship Assessment and Improvement Plan tool – Tab 2. Set Parameters.
  2. Review the 60 relationship indicators in column E of Tab 2. Set Parameters.
  3. Identify any relationship indicators that are important to you but that are missing from the prepopulated list.
  4. Add the relationship indicators you identified in step 3 above in the space provided at the end of column E of Tab 2. Set Parameters. There is space for up to 15 additional relationship indicators.
InputOutput
  • Elevate – Relationship Assessment and Improvement Plan Tool
  • Brainstorming
  • Configured Relationship Assessment and Improvement Plan tool
MaterialsParticipants
  • Elevate – Relationship Assessment and Improvement Plan tool
  • Whiteboard of flip chart
  • VMI team

Download the Info-Tech Elevate – Relationship Assessment and Improvement Plan tool

Step 2.6 – Vendor-at-a-glance reports

Configure executive and stakeholder reports

Executives and stakeholders (“E&S”) discuss vendors during internal meetings and often meet directly with vendors as well. Having a solid working knowledge of all the critical vendors used by an organization is nearly impossible for E&S. Without situational awareness, though, E&S can appear uninformed, can be at the mercy of others with better information, and can be led astray by misinformation. To prevent these and other issues from derailing the E&S, two essential vendor-at-a-glance reports can be used.

The first report is the 60-Second Report. As the name implies, the report can be reviewed and digested in roughly a minute. The report provides a lot of information on one page in a combination of graphics, icons, charts, and words.

The second report is a vendor calendar. Although it is a simple document, the Vendor Calendar is a powerful communication tool to keep E&S informed of upcoming events with a vendor. The purpose is not to replace the automated calendaring systems (e.g. Outlook), but to supplement them.

Combined, the 60-Second Report and the Vendor Calendar provide E&S with an overview of the information required for any high-level meeting with a vendor or to discuss a vendor.

2.6.1 – Vendor-at-a-glance reports (60-Second Report)

30 – 90 Minutes

  1. Meet with the participants to review the sample 60-Second Report and the Checklist of Potential Topics in Elevate – Tools and Templates Compendium – Tab 2.6.1 V-at-a-G 60-Second Report.
  2. Identify topics of interest and ways to convey the data/information. (Make sure the data sources are valid and the data are easy to obtain.)
  3. Create a framework for the report and populate the fields with sample data. Use one printed page as a guideline for the framework; if it doesn’t fit on one page, adjust the amount of content until it does. If you adjust the margins, font, size of the graphic content, and other items, make sure you don’t reduce the size too much. The brain needs white space to more easily absorb the content, and people shouldn’t have to squint to read the content!
  4. Share the mockup with the intended audience and get their feedback. Use an iterative approach until you are satisfied that no further changes are necessary (or reasonable). Keep in mind that you will not be able to please everyone!
InputOutput
  • Elevate – Tools and Templates Compendium – Tab 2.6.1 V-at-a-G 60-Second Report
  • Design elements and framework for 60-Second Reports
MaterialsParticipants
  • Elevate – Tools and Templates Compendium – Tab 2.6.1. V-at-a-G 60-Second Report
  • Whiteboard or flip chart
  • VMI team

Download the Info-Tech Elevate – Tools and Templates Compendium

2.6.2 – Vendor-at-a-glance reports (vendor calendar)

15 – 30 Minutes

  1. Meet with the participants to review the sample Vendor Calendar format in Elevate – Tools and Templates Compendium – Tab 2.6.2 V-at-a-G Vendor Calendar.
  2. Brainstorm as a team to identify items to include in the calendar (e.g. business alignment meeting dates, conference dates, contract renewals).
  3. Determine whether you want the Vendor Calendar to be:
    1. A calendar year or a fiscal year (if they are different in your organization)
    2. A rolling twelve-month calendar or a fixed calendar.
  4. Decide whether the fill color for each month should change based on your answers in 3, above. For example, you might want a color scheme by quarter or by year (if you choose a rolling twelve-month calendar).
  5. Share the mockup with the intended audience to get their feedback. Use an iterative approach until you are satisfied that no further changes are necessary (or reasonable). Keep in mind you will not be able to please everyone!
InputOutput
  • Elevate – Tools and Templates Compendium – Tab 2.6.2 V-at-a-G Vendor Calendar
  • Brainstorming
  • Framework and topics for Vendor Calendar Reports
MaterialsParticipants
  • Elevate – Tools and Templates Compendium – Tab 2.6.2 V-at-a-G Vendor Calendar
  • Whiteboard or flip chart
  • VMI team

Download the Info-Tech Elevate – Tools and Templates Compendium

Step 2.7 – VMI personnel competency evaluation tool

Identify skills, competencies, and knowledge required for success

The image contains a screenshot of the VMI personnel competency evaluation tool.

By now, you have built and begun managing the VMI’s 3-year roadmap and 90-day plans to help you navigate the VMI’s day-to-day operational path. To complement these plans, it is time to build a roadmap for the VMI’s personnel as well. It doesn’t matter whether VMI is just you, you and some part-time personnel, a robust and fully staffed vendor management office, or some other point on the vendor management spectrum. The VMI is a reflection of its personnel, and they must improve their skills, competencies, and knowledge (“S/C/K”) over time for the VMI to reach its potential. As the adage says, “What got you here won’t get you there.”

To get there requires a plan that starts with creating an inventory of the VMI’s team members’ S/C/K. Initially, focus on two items:

  • What S/C/K does the VMI currently have across its personnel?
  • What S/C/K does the VMI need to get to the next level?

Conducting an assessment of and developing an improvement plan for each team member will be addressed later in this blueprint. (See steps 3.7 – Evaluate VMI Personnel, 3.8 – Improve Professional Skills, and 3.9 - Expand Professional Knowledge.)

2.7.1 – VMI Personnel Competency Evaluation Tool

15 – 60 Minutes

  1. Review the two options of the competency matrix found in Elevate – Tools and Templates Compendium tabs 2.7.1 and 2.7.2 and decide which format you want to use.
  2. Review and modify as needed the prepopulated list of skills, competencies, knowledge, and other intellectual assets found in section 1 of the template option you selected in step 1. The list you use should reflect items that are important to your VMI's mission, goals, scope, charter, and operations.
  3. No changes are required to Sections 2 and 3. They are dashboards and will be updated automatically based on any changes you make to the skills, competencies, knowledge, and other intellectual assets elements in section 1.
Input Output
  • Elevate – Tools and Templates Compendium – Tabs 2.7.1 and 2.7.2
  • Current job descriptions
  • A list of competencies, skills, and knowledge VMI personnel
    • Should have
    • Do have

An assessment and inventory of competencies, skills, knowledge, and other intellectual assets by VMI team member

Materials Participants
  • Elevate – Tools and Templates Compendium – Tabs 2.7.1 and 2.7.2
  • VMI team lead
  • VMI team members as needed

Download the Info-Tech Elevate – Tools and Templates Compendium.

Step 2.8 – Internal feedback tool

Create a user-friendly survey to learn about the VMI’s impact on the organization

The image contains a screenshot of the internal feedback tool.

*Adapted from “Best Practices for Every Step of Survey Creation” from surveymonkey.com and “The 9 Most Important Survey Design Tips & Best Practices” by Swetha Amaresan.

As part of the vendor management lifecycle, the VMI conducts an annual review to assesses compliance with policies and procedures, to incorporate changes in leading practices, to ensure that lessons learned are captured and leveraged, to validate that internal alignment is maintained, and to update governances as needed. As the VMI matures, the annual review process should incorporate feedback from those the VMI serves and those directly impacted by the VMI’s efforts. Your internal clients and others will be able to provide insights on what the VMI does well, what needs improvement, what challenges arise when using the VMI’s services, and other issues.

A few best practices for creating surveys are set out below:*

  1. Start by establishing a clearly defined, attainable, and high-level goal by filling in the blank: "I want to better understand [blank] (e.g. how the VMI impacts our clients and the executives/stakeholders)." From there, you can begin to derive questions that will help you meet your stated goal.
  2. Use mostly “closed-ended” questions in the survey – responses selected from a list provided. Do ask some “open-ended” questions at the end of the survey to obtain specific examples, anecdotes, or compliments by providing space for the respondent to provide a narrative.
  3. Avoid using biased and leading questions, for example, “Would you say the VMI was great or merely fabulous?” The goal is to get real feedback that helps the VMI improve. Don’t ask the respondents to tell you what you want to hear…listen to what they have to say.

Step 2.8 – Internal feedback tool

Create a user-friendly survey to learn about the VMI’s impact on the organization (continued)

The image contains a screenshot of the internal feedback tool.

4. Pay attention to your vocabulary and phrasing; use simple words. The goal is to communicate effectively and solicit feedback, and that all starts with the respondents being able to understand what you are asking or seeking.

5. Use response scales and keep the answer choices balanced. You want the respondents to find an answer that matches their feedback. For example, potential answers such as “strongly agree, agree, neutral, disagree, strongly disagree” are better than “strongly agree, agree, other.”

6. To improve your response rate, keep your survey short. Most people don’t like surveys, but they really hate long surveys. Make every question count, and keep the average response time to a maximum of a couple of minutes.

7. Watch out for “absolutes;” they can hurt the quality of your responses. Avoid using language such as always, never, all, and every in your questions or statements. They tend to polarize the evaluation and make it feel like an all-or-nothing situation.

8. Ask one question at a time or request evaluation of one statement at a time. Combining two topics into the same question or statement (double-barreled questions or statements) makes it difficult for the respondent to determine how to answer if both parts require different answers, for example, “During your last interaction with the VMI, how would you rate our assistance and friendliness?”

2.8.1 – Internal Feedback Tool

15 – 60 Minutes

  1. Meet with the participants and review the information in Elevate – Phase 2 Tools and Templates Compendium – Tab 2.8.
  2. Two types of surveys are referenced in tab 2.8: a general awareness survey and a specific interaction survey. Decide whether you want to create one or both for your VMI.
    1. For a general awareness survey, review the questions in part 1 of tab 2.8 and make any changes required to meet your needs. Try to keep the number of questions to seven or less. Determine who will receive the survey and how often it will be used.
    2. For a specific interaction survey, review the questions in Part 2 of Tab 2.8. Select up to 7 questions you want to use, making changes to existing questions or creating your own. The goal of this survey is to solicit feedback immediately after one of your internal clients has used the VMI’s services. You may need multiple variations of the survey based on the types of interactions or services the VMI provides.
  3. Balance the length of the surveys against the information you are seeking and the time required for the respondents to complete the survey.
InputOutput
  • Elevate – Phase 2 Tools and Templates Compendium – Tab 2.8
  • Brainstorming
  • Configured internal surveys
MaterialsParticipants
  • Elevate – Phase 2 Tools and Templates Compendium – Tab 2.8
  • VMI team

Download the Info-Tech Elevate –Tools and Templates Compendium

Step 2.9 – VMI ROI calculation

Identify ROI variables to track

After the VMI has been operating for a year or two, questions may begin to surface about the value the VMI provides. “We’re making an investment in the VMI. What are we getting in return?” “Does the VMI provide us with any tangible benefits, or is it another mandatory area like Internal Audit?” To keep the naysayers at bay, start tracking the value the VMI adds to the organization or the return on investment (ROI) provided.

The easy thing to focus on is money: hard-dollar savings, soft-dollar savings, and cost avoidance. However, the VMI often plays a critical role in vendor-facing activities that lead to saving time, improving performance, and managing risk. All of these are quantifiable and trackable. In addition, internal customer satisfaction (step 2.8 and step 3.11) can provide examples of the VMI’s impact beyond the four pillars of money, time, performance, and risk.

VMI ROI is a multifaceted and complex topic that is beyond the scope of this blueprint. However, you can do a deep (or shallow) dive on this topic by downloading and reading Info-Tech’s blueprint Capture and Market the ROI of Your VMO to plot your path for tracking and reporting the VMI’s ROI or value.

Download the Info-Tech blueprint Capture and Market the ROI of Your VMO

2.9.1 – VMI ROI calculation

2 – 4 Hours

  1. Meet with the participants to review the Info-Tech blueprint Capture and Market the ROI of Your VMO.
  2. Identify your ROI maturity level using the tools from that blueprint.
  3. Develop a game plan for measuring and reporting your ROI.
  4. Configure the tools to meet your needs.
  5. Gain approval from applicable stakeholders or executives.
Input Output
  • The tools and materials from the Info-Tech blueprint Capture and Market the ROI of Your VMO
  • Brainstorming
  • Game plan for measuring and reporting ROI
Materials Participants
  • The Info-Tech blueprint Capture and Market the ROI of Your VMO and its tools
  • VMI team
  • Executives and stakeholders as needed

Download the Info-Tech blueprint Capture and Market the ROI of Your VMO

Step 2.10 – Vendor recognition program

Address the foundational elements of your program

A vendor recognition program can provide many benefits to your organization. Obtaining those benefits requires a solid plan and the following foundational elements:

  • Internal alignment: The program must align with your organization’s principles and culture. A vendor recognition program that accentuates value and collaboration will not succeed in a customer environment that operates with a “lowest cost wins/price is the only thing we care about” mentality.
  • Funding: Not every program requires extensive funding (or any funding), but more formal vendor recognition programs do require some investment. Underfunding will make your program look cheap and unimpressive. For example, a certificate of appreciation printed on plain paper using a Word template doesn’t send the same message as a nice plaque engraved with the winner’s name.
  • Support: Executive buy-in and support are essential. Without this, only the most informal vendor recognition programs stand a chance of surviving. Executives and stakeholders are often directly involved in formal programs, and this broadens the appeal of the program from the vendor’s perspective.
  • Designated leader: Someone needs to be in charge of the vendor recognition program. This doesn’t mean only one person is doing all the work, but it does require one person to lead the effort and drive the program forward. Much like the VMI itself, there are things the leader will be able to do themselves and things that will require the input, assistance, and participation from others throughout the organization.

Step 2.10 – Vendor recognition program

Leverage the advantages of recognizing vendors

As with any project, there are advantages and disadvantages with implementing and operating a vendor recognition program.

Advantages:

  • The Pygmalion effect may come into play; the vendors’ performance can be influenced by your expectations as conveyed through the program.
  • There may be some prestige for the vendor associated with winning one of your awards or receiving recognition.
  • Vendor recognition programs can be viewed as a competition, and this can improve vendor performance as it relates to the program and program categories.
  • The program can provide additional feedback to the vendor on what's important to you and help the vendor focus on those items.
  • The vendors’ executives may have an increased awareness of your organization, which can help build relationships.
  • Performance gains can be maintained or increased. Vendors are competitive by nature. Once a vendor wins an award or receives the recognition, it will strive to win again the following year (or measurement period).

Step 2.10 – Vendor recognition program

Manage the disadvantages of recognizing vendors

Just as a coin has two sides, there are two sides to a vendor recognition program. Advantages must be weighed against disadvantages, or at the very least, you must be aware of the potential disadvantages.

Disadvantages:

  • The program may require funding, depending upon the scope and type of awards, rewards, and recognition being provided.
  • Some vendors who don’t qualify for the program or who fail to win may get hurt feelings. This may alienate them.
  • In addition to hurt feelings from being excluded or finishing outside of the winner’s circle, some vendors may believe the program shows favoritism to certain vendors or is too subjective.
  • Some vendors may not “participate” in the program; they may not understand the WIIFM (what’s in it for me). You may have to “sell” the benefits and advantages of participation to the vendors.
  • Participation may vary by size of vendor. The award, reward, or recognition may mean more to small and mid-sized companies than large companies.

Step 2.10 – Vendor recognition program

Create your program’s framework

There is no one-size-fits-all approach to creating a vendor recognition program. Your program should align with your goals. For example, do you want to drive performance and collaboration, or do you want to recognize vendors that exceed your expectations? While these are not mutually exclusive, the first step is to identify your goals. Next, focus on whether you want a formal or informal program. An informal program could consist of sending thank-you emails or notes to vendor personnel who go above and beyond; a formal program could consist of objective criteria announced and measured annually, with the winners receiving plaques, publicity, and/or recognition at a formal award ceremony with your executives. Once you have determined the type of program you want, you can begin building the framework.

Take a “crawl, walk, run” approach to designing, implementing, and running your vendor recognition program. Start small and build on your successes. If you try something and it doesn’t work the way you intended, regroup and try again.

The vendor recognition program may or may not end up residing in the VMI. Regardless, the VMI can be instrumental in creating the program and reinforcing it with the vendors. Even if the program is run and operated by the VMI, other departments will need to be involved. Seek input from the legal and marketing departments to build a durable program that works for your environment and maximizes its impact.

Lastly, don’t overlook the simple gestures…they go a long way to making people feel appreciated in today’s impersonal world. A simple (but specific) thank-you can have a lasting impact, and not everything needs to be about the vendor’s organization. People make the organization “go,” not the other way around.

2.10.1 – Vendor recognition program

30 – 90 Minutes

  1. Meet with the participants to review the checklist in Elevate – Tools and Templates Compendium, Tab 2.10 Vendor Recognition.
    1. Decide whether you want to create a program that recognizes individual vendor personnel. If so, review part 1 of tab 2.10 and select the elements you are interested in using to build your program.
    2. Decide whether you want to create a program that recognizes vendors at the company level. If so, review part 2 of tab 2.10.
      1. The first section lists elements of an informal and a formal approach. Decide which approach you want to take.
      2. The second section focuses on creating a formal recognition program. Review the checklist and identify elements that you want to include or issues that must be addressed in creating your program.
  2. Create a draft framework of your programs and work with other areas to finalize the program elements, timeline, marketing, budget, and other considerations.
Input Output
  • Elevate – Tools and Templates Compendium – Tab 2.10 Vendor Recognition
  • Brainstorming
  • A framework for a vendor recognition program
Materials Participants
  • Elevate – Tools and Templates Compendium – Tab 2.10. Vendor Recognition
  • Whiteboard or flip chart
  • VMI team
  • Executives and stakeholders as needed
  • Marketing and legal as needed

Download the Info-Tech Elevate – Tools and Templates Compendium

Phase 3 – Run

Use New and Updated Tools and Increase the VMI’s Impact

Phase 1

Phase 2

Phase 3

Phase 4

1.1 Review and update existing Plan materials

2.1 Vendor classification models

2.2 Customer positioning model

2.3 Two-way scorecards

2.4 Performance improvement plan (PIP)

2.5 Relationship improvement plan (RIP)

2.6 Vendor-at-a-glance reports

2.7 VMI personnel competency evaluation tool

2.8 Internal feedback tool

2.9 VMI ROI calculation

2.10 Vendor recognition program

3.1 Classify vendors and identify customer position

3.2 Assess the relationship landscape

3.3 Leverage two-way scorecards

3.4 Implement PIPs and RIPs

3.5 Gather market intelligence

3.6 Generate vendor-at-a-glance reports

3.7 Evaluate VMI personnel

3.8 Improve professional skills

3.9 Expand professional knowledge

3.10 Create brand awareness

3.11 Survey internal clients

3.12 Calculate VMI ROI

3.13 Implement vendor recognition program

4.1 Investigate potential alliances

4.2 Continue increasing the VMI’s strategic value

4.3 Review and update

This phase will walk you through the following activities:

This phase helps you begin integrating the new tools and templates into the VMI’s operations. The main outcomes from this phase are guidance and the steps required to continue your VMI’s maturation and evolution.

This phase involves the following participants:

  • VMI team
  • IT
  • Legal
  • Marketing
  • Human resources
  • Applicable stakeholders and executives
  • Others as needed

Phase 3 – Run

Implement new processes, tools, and templates and leverage new concepts

The review and assessment conducted in Phase 1 – Plan and the tools and templates created and configured during Phase 2 – Build are ready for use and incorporation into your operations. As you trek through Phase 3 – Run, a couple of familiar concepts will be reviewed (vendor classification and scorecarding), and additional details on previously introduced concepts will be provided (customer positioning, surveying internal clients); in addition, new ideas will be presented for your consideration:

  • Assessing the relationship landscape
  • Gathering market intelligence
  • Improving professional skills
  • Expanding professional knowledge
  • Creating brand awareness

Step 3.1 – Classify vendors & identify customer position

Classify your top 25 vendors by spend

The methodology used to classify your vendors in the blueprint Jump Start Your Vendor Management Initiative applies here as well, regardless of whether you use the COST model or the MVP model. Info-Tech recommends using an iterative approach initially to validate the results from the model you configured in step 2.1.

  1. Start with your top 25 vendors by spend. From this pool, select 10 vendors: choose your top three vendors by spend, three from the middle of the pack (e.g. numbers 14, 15, and 16 by spend), and the bottom four by spend. Run all 10 vendors through the classification model and review the results.
  2. If the results are what you expected and do not contain any significant surprises, run the rest of the top 25 vendors through the model.
  3. If the results are not what you expected or do contain significant surprises, look at the configuration page of the tool (tab 2) and adjust the weights slightly. Be cautious in your evaluation of the results before modifying the configuration page – some legitimate results are unexpected or surprises based on biases or subjective expectations. Proceed to point 1 above and repeat this process as needed.

Remember to share the results with executives and stakeholders. Switching from one classification model to another may lead to concerns or questions. As always, obtain their buy-in on the final results.

Step 3.1 – Classify vendors and identify customer position

Translate terminology and processes if you use the MVP vendor classification model

If you use the MVP model, the same features will be applicable and the same processes will be followed after classifying your vendors, despite the change in nomenclature. (Strategic vendors are the equivalent of principal vendors; high operational and high tactical vendors are the equivalent of valued vendors; and all other vendors are the equivalent of minor vendors.)

  • Roughly 5% (max) of your total vendor population will be classified as principal.
  • Approximately 10% (max) of your total vendor population will be classified as valued.
  • About 80% of your total vendor population will be classified as minor.
  • Business alignment meetings should be conducted and scorecards should be compiled quarterly for your principal vendors and at least every six months for your valued vendors; business alignment meetings are not necessary for your minor vendors.
  • All other activities will be based on the criteria you used in your MVP model. For example, risk measuring, monitoring, and reporting might be done quarterly for principal and valued vendors if risk is a significant component in your MVP model; if risk is a lesser component, measuring, monitoring, and reporting might be done less frequently (every six or 12 months).

Step 3.1 – Classify vendors and identify customer position

Determine your customer position for your top 25 vendors using the OPEN model

The image contains a screenshot of the customer positioning model.

After classifying your vendors, run your top 25 vendors through the OPEN Model Customer Positioning Tool. The information you need can come from multiple sources, including:

  • Talking to internal personnel to determine responses to the OPEN model assessment statements.
  • Compiling spend information.
  • Looking at the vendors’ financial statements.
  • Talking with the vendors to glean additional information.

At first blush, the results can run the emotional and logical gamut: shocking, demeaning, degrading, comforting, insightful, accurate, off-kilter, or a combination of these and other reactions. To a certain extent, that is the point of the activity. As previously stated, customers often overestimate their importance to a vendor. To be helpful, your perspective must be as objective as possible rather than the subjective view painted by the account team and others within the vendor (e.g. “You’re my favorite client,” “We love working with you,” “You’re one of our key accounts,” or “You’re one of our best clients.”) The vendor often puts customers on a pedestal that is nothing more than sales puffery. How a vendor treats you is more important than them telling you how great you are.

Use the OPEN model results and the material on the following pages to develop a game plan as you move forward with your vendor-facing VMI activities. The outcomes of the OPEN model will impact your business alignment meetings, scorecards, relationships, expectations, and many other facets of the VMI.

Info-Tech Insight

The OPEN Model Customer Positioning Tool can be adapted for use at the account manager level to determine how important your account is to the account manager.

*Adapted from Profitable Purchasing Strategies by Paul T. Steele and Brian H. Court

Step 3.1 – Classify vendors and identify customer position

Learn how each quadrant of the open model impacts your organization (continued)

Opportunity

Low value and high attractiveness

Characteristics and potential actions by the vendor

  • Higher level of service provided.
  • Higher level of attention.
  • Nurture the customer.1
  • Expand the business and relationship.1
  • Seek new opportunities.2
  • Provide proactive service.
  • Demonstrate added value.

Customer strategies

  • Leverage the position – the vendor may be willing (at least in the short term) to meet your requirements in order to win more business.3
  • Look for ways to improve your value to the vendor and to grow the relationship and business if it works to your advantage.
1. Procurement Cube, 2020. 2. Accuity Consultants, 2012. 3. New Zealand Ministry of Business, Innovation & Employment, 2021.

Step 3.1 – Classify vendors and identify customer position

Learn how each quadrant of the OPEN model impacts your organization (continued)

Preferred

High value and high attractiveness

Characteristics and potential actions by the vendor

  • High level of service provided.
  • High level of attention, service, and response.1
  • The supplier actively seeks longer-term commitments.2
  • Retain and expand the business and relationship.3
  • Look after and pamper the customer.4
  • Fight to keep the account.
  • There is a dedicated account manager2 (you are the account manager’s only account).

Customer strategies

  • Establish a rewarding business relationship in which both parties continually seek to add value.3
  • Leverage the relationship to gain better access to innovation, collaborate to eliminate waste, and work together to maintain or increase your competitive advantages.1
    1. Procurement Cube, 2020. 2. Comprara, 2015. 3. New Zealand Ministry of Business, Innovation & Employment, 2021. 4. Accuity Consultants, 2012.

Step 3.1 – Classify vendors and identify customer position

Learn how each quadrant of the OPEN model impacts your organization (continued)

Exploitable

High value and low attractiveness

Characteristics and potential actions by the vendor

  • Lower level of service provided.
  • Lower level of attention.
  • Strive for best price from the customer (i.e. premium pricing).1
  • Seek short-term advantage and consistent price increases.
  • Accept risk of losing the customer.
  • Focus on maximizing profits.2
  • Provide reactive service.

Customer strategies

  • Look for alternative vendors or try to make the relationship more attractive by considering more efficient ways to do business2 or focusing on issues other than pricing.
  • Identify ways to improve your organization’s attractiveness to the vendor or the account manager.
1. Accuity Consultants, 2012. 2. New Zealand Ministry of Business, Innovation & Employment, 2021.

Step 3.1 – Classify vendors and identify customer position

Learn how each quadrant of the open model impacts your organization

Negligible

Low value and low attractiveness

Characteristics and potential actions by the vendor

  • Lower level of service provided.
  • Lower level of attention.1
  • Loss of interest and enthusiasm for customer’s business.
  • Loss of customer will not cause any pain.1
  • Terminate the relationship.2
  • Terms and conditions are the “standard” terms and are non-negotiable.3
  • There is a standard price list and discounts are in line with industry norms.3

Customer strategies

  • You may wish to consider sourcing from other suppliers who value your business more highly.2
  • Identify the root cause of your position and determine whether it is worthwhile (or possible) to improve your position.
1. Procurement Cube, 2020. 2. New Zealand Ministry of Business, Innovation & Employment, 2021. 3 Comprara, 2015.

Step 3.1 – Classify vendors and identify customer position

Think like a vendor to increase situational awareness

In summary, vendor actions are understandable and predictable. Learning about how they think and act is invaluable. As some food for thought, consider this snippet from an article aimed at vendors:

“The [customer positioning] grid or matrix is, in itself, a valuable snapshot of the portfolio of customers. However, it is what we do with this information that governs how effective the tool is. It can be used in many ways:

  • It helps in the allocation of resources to specific customers, and whether the right resources are being allocated to the right customers.
  • It can determine the style of relationship that is appropriate to have with this client – and whether the real relationship truly reflects this.
  • It can influence the amount of time spent with these clients. Interestingly, we often find that a disproportionate amount of management time is spent on [Negligible] Customers (at the expense of spending more time with [Preferred] Accounts)!
  • It should significantly influence the price and profitability targets for specific customers.
  • And, last but by no means least, it should determine our negotiation style for different customers.”1
1 “Rule No. 5: All Customers/Suppliers Have a Different Value to You,” New Dawn Partners.

Step 3.2 – Assess the relationship landscape

Identify key relationships and relationship risks

After classifying your vendors (COST or MVP model) and identifying your positioning for the top vendors via the OPEN Model Customer Positioning Tool, the next step is to assess the relationship landscape. For key vendors (strategic, high operational, and high tactical under the COST model and principal and valued under the MVP model), look closer at the relationships that currently exist:

  • What peer-to-peer relationships exist between your organization and the vendor (e.g. your project manager works closely with the vendor’s project manager)? Look across executives, mid-level management, and frontline employees.
  • What politically charged relationships exist between employees of the two organizations and the organizations themselves? Examples include:
    • Friendships, neighbors, and relationships fostered by children on the same sports team or engaged in other activities.
    • Serving on third-party boards of directors or working with the same charities in an active capacity.
    • Reciprocity relationships where each organization is a customer and vendor to the other (e.g. a bank buys hardware from the vendor and the vendor uses the customer for its banking needs).
  • How long has the contract relationship been in place?

This information will provide a more holistic view of the dynamics at work (or just beneath the surface) beyond the contract and operational relationships. It will also help you understand any relationship leverage that may be in play…now or in the future…from each party’s perspective.

3.2.1 – Assess the relationship landscape

10 - 30 Minutes per vendor

  1. Decide whether to meet with the participants in small groups or as a large group.
  2. Using Elevate – Tools and Templates Compendium – Tab 3.2 Relationship Landscape, for each important vendor (strategic, tactical, and operational under the COST model or principal and valued under the MVP model), identify and evaluate the relationships that exist for the following categories:
    1. Professional: relationships your personnel have with the vendor’s executives, mid-level management, and frontline employees.
    2. Political: personal relationships between customer and vendor personnel, any professional connections, and any reciprocity between your organization and the vendor.
Input Output
  • Relationship information
  • Vendor classification categories for each vendor being assessed
  • A list of customer-vendor relationships
  • Potential reciprocity issues to manage
Materials Participants
  • Elevate – Tools and Templates Compendium – Tab 3.2 Relationship Landscape
  • VMI team
  • Stakeholders
  • Others with knowledge of customer/vendor relationships

Download the Info-Tech Elevate – Tools and Templates Compendium

Step 3.3 – Leverage two-way scorecards

Roll out your new vendor scorecards and feedback forms

As you roll out your new, enhanced scorecards, the same principles apply. Only a couple of modifications need to be made to your processes.

For the vendor scorecards, the VMI will still be driving the process, and internal personnel will still be completing the scorecards. An email or short orientation meeting for those involved will ease the transition from the old format to the new format. Consider creating a FAQ (frequently asked questions) for the new template, format, and content; you’ll be able to leverage it via the email or meeting to answer questions such as: What changed? Why did it change? Why are we doing this? In addition, making a change to the format and content may generate a need for new or additional internal personnel to be part of the scorecarding process. A scorecarding kick-off meeting or orientation meeting will ensure that the new participants buy into the process and acclimate to the process quickly.

For the vendor feedback, the look and feel is completely new. The feedback questions that were part of the BAM agenda have been replaced by a more in-depth approach that mirrors the vendor scorecards. Consider conducting a kick-off meeting with each participating vendor to ensure they understand the importance of the feedback form and the process for completing it. Remember to update your process to remind the vendors to submit the feedback forms three to five business days prior to the BAM (and update your BAM agenda). You will want time to review the feedback and identify any questions or items that need to be clarified. Lastly, set aside some extra time to review the feedback form in the first BAM after you shift to the formal format.

Step 3.4 – Implement PIPs and RIPs

Improve vendor performance

Underperforming vendors are similar to underperforming employees. There can be many reasons for the lackluster performance, and broaching the subject of a PIP may put the vendor on the defensive. Consider working with the human resources department (or whatever it is called in your organization) to learn some of the subtle nuances and best practices from the employee PIP realm that can be used in the vendor PIP realm.

When developing the PIP, make sure you:

  • Work with legal to ensure compliance with the contract and applicable laws.
  • Adequately convey the expected performance to the vendor; it is unfair to hold a vendor accountable for unreasonable and unconveyed expectations.
  • Work with the vendor on the PIP rather than imposing the PIP on the vendor.
  • Remain objective and be realistic about timelines and improvement.

Not all performance issues require a PIP; some can be addressed one-on-one with the vendor’s account manager, project manager, or other personnel. The key is to identify meaningful problems and use a PIP to resolve them when other measures have failed or when more formality is required.

A PIP is a communication tool, not a punishment tool. When used properly, PIPs can improve relationships, help avoid lawsuits, and prevent performance issues from having a significant impact on your organization.

Step 3.4 – Implement PIPs and RIPs

Improve vendor relationships

After assessing the relationship landscape in step 3.2 and configuring the Relationship Assessment and Improvement Plan Tool in step 2.5, the next step is to leverage that information: 1) establish a relationship baseline for each critical vendor; and 2) develop and implement a plan for each to maintain or improve those relationships.

The Relationship Assessment and Improvement Plan Tool provides insights into the actual status of your relationships. It allows you to quantify and qualify those relationships rather than relying on intuition or instinct. It also pinpoints areas that are strong and areas that need improvement. Identify your top seven relationship priorities and build your improvement/maintenance plan around those to start. (This number can be expanded if some of your priorities are low effort or if you have several people who can assist with the implementation of the plan.) Decide which relationship indicators need a formal plan, which ones require only an informal plan, and which ones involve a hybrid approach. Remember to factor in the maintenance aspect of the relationship – if something is going well, it can still be a top priority to ensure that the relationship component remains strong.

Similar to a PIP, your RIP can be very formal with action items and deadlines. Unlike a PIP, the RIP is typically not shared with the vendor. (It can be awkward to say, “Here are the things we’re going to do to improve our relationship, vendor.”)

The level of formality for your plan will vary. Customize your plan for each vendor. Relationships are not formulaic, although they can share traits. Keep in mind what works with one person or one vendor may not work for another. It’s okay to revisit the plan if it is not working and make adjustments.

Step 3.5 – Gather market intelligence

Determine the nature and scope of your market intelligence

What is market intelligence?

Market intelligence is a broad umbrella that covers a lot of topics, and the breadth and depth of those topics depend on whether you sit on the vendor or customer side of the equation. Even on the customer side, the scope and meaning of market intelligence are defined by the role served by those gathering market intelligence. As a result, the first step for the VMI is to set the boundaries and expectations for its role in the process. There can be some overlap between IT, procurement/sourcing, and the VMI, for example. Coordinating with other functional areas is a good idea to avoid stepping on each other’s toes or expending duplicate resources unnecessarily.

For purposes of this blueprint, market intelligence is defined as gathering, analyzing, interpreting, and synthesizing data and information about your critical vendors (high operational, high tactical, and strategic under the COST model or valued and principal under the MVP model), their competitors, and the industry. Market intelligence can be broken into two basic categories: individual vendors and the industry as a whole. For vendors, it generally encompasses data and information about products and services available, each vendor’s capabilities, reputation, costs, pricing, advantages, disadvantages, finances, location, risks, quality ratings, standard service level agreements (SLAs) and other metrics, supply chain risk, total cost of ownership, background information, and other points of interest. For the industry, it can include the market drivers, pressures, and competitive forces; each vendor’s position in the industry; whether the industry is growing, stable, or declining; whether the industry is competitive or led by one or two dominant players; and the potential for disruption, trends, volatility, and risk for the industry. This represents some of the components of market intelligence; it is not intended to be an exhaustive list.

Market intelligence is an essential component of a VMI as it matures and strives to be strategic and to provide significant value to the organization.

Step 3.5 – Gather market intelligence

Determine the nature and scope of your market intelligence

What are the benefits of gathering market intelligence?

Depending on the scope of your research, there are many potential uses, goals, and benefits that flow from gathering market intelligence:

  • Identify potential alternate vendors.
  • Learn more about the vendors and market in general.
  • Identify trends, innovations, and what’s available in the industry.
  • Improve contract protections and mitigate contract/performance risk.
  • Identify more comprehensive requirements for RFPs and negotiations.
  • Identify the strengths, weaknesses, opportunities, and threats for vendors.
  • Assist with minority/women/veteran-owned business or small business use initiatives.
  • Improve the pool of potential vendors for future RFPs, which can improve competition for your business.
  • Leverage information gained when negotiating or renegotiating at renewal (better terms and conditions).
  • Ensure ongoing alignment or identify gaps/risks between your current vendor’s capabilities and your needs.

Step 3.5 – Gather market research and intelligence

Begin collecting data and information

What are some potential sources of information for market intelligence?

For general information, there are many places to obtain market intelligence. Here are some common resources:

  • User groups
  • The internet
  • Vendor demos
  • Vendor marketing materials and websites
  • Internal personnel interviews and meetings
  • Industry publications and general periodicals
  • Trade shows and conferences (hosted or attended by vendors)
  • Requests for information (RFIs) and requests for proposal (RFPs)
  • Vendor financial filings for publicly held companies (e.g. annual reports, 10-K, 10-Q)

Keep in mind the source of the information may be skewed in favor of the vendor. For example, vendor marketing materials may paint a rosier picture of the vendor than reality. Using multiple sources to validate the data and information is a leading practice (and common sense).

For specific information, many VMIs use a third-party service. Third-party services can dedicate more resources to research since that is their core function. However, the information obtained from any third party should be used as guidance and not as an absolute. No third-party service has access to every deal, and market conditions can change often and quickly.

Step 3.5 – Gather market research and intelligence

Resolve storage and access issues

Some additional thoughts on market intelligence

  • Market intelligence is another tool in the VMI’s toolbox. How you use it and what you do with the results of your efforts is critical. Collecting information and passing it on without analysis or insights is close to being a capital offense.
  • As previously mentioned, defining the scope and nature of market intelligence is the first step. In conjunction with that, remember to identify where the information will be stored. Set up a system that allows for searching by relevance and easy retrieval. You can become overwhelmed with information.
  • Periodically update the scope and reach of your market intelligence efforts. Do you need to expand, contract, or maintain the breadth and depth of your research? Do new vendors and industries need to be added to the mix?
  • Information can grow stale. Review your market intelligence repository at least annually and purge unneeded or outdated information. Be careful though – some historical information is helpful to show trends and evolution. Decide whether old information should be deleted completely or moved to an archive.
  • Determine who should have access to your repository and what level of access they should have. Do you want to share outside of the VMI? Do you want others to contribute to or modify/edit the material in the repository or only be able to read from the repository?

Step 3.6 – Generate vendor-at-a-glance reports

Keep executives and stakeholders informed about critical vendors

Much of the guidance provided on reports in the blueprint Jump Start Your Vendor Management Initiative holds true for the 60-Second Report and the Vendor Calendar.

  • Determine who will be responsible for updating the reports, knowing that the VMI will be mainly coordinating the process and assembling the data/information rather than obtaining the data firsthand.
  • Determine the frequency. Most likely it will be periodic and ad hoc; for example, you may decide to update the 60-Second Report in whole or in part each quarter, but you may need to update it in the middle of the quarter if an executive has a meeting with one of your critical vendors at that time.
  • Even though you obtained feedback and “approval” from executives and stakeholders during step 2.6, you will still want to seek their input periodically. Their needs may change from time to time with respect to data, information, and formatting. Avoid the temptation to constantly make changes to the format, though. After the initial review cycle, try to make changes only annually as part of your ongoing review process.
  • Unfortunately, these reports require a manual approach; some parts may be automated, but that will depend on your format and systems.

These reports should be kept confidential. Consider using a “confidential” stamp, header, watermark, or other indicator to highlight that the materials are sensitive and should not be disclosed outside of your organization without approval.

Step 3.7 – Evaluate VMI personnel

Compare skills, competencies, and knowledge needed to current levels

Using the configured VMI personnel assessment tool (Elevate – Tools and Templates Compendium tab 2.7.1 or 2.7.2), evaluate each VMI employee’s skills, competencies, and knowledge (S/C/K) against the established minimum level required/desired field for each. Use this tool for full-time and part-time team members to obtain a complete inventory of the VMI’s S/C/K.

After completing the assessment, you will be able to identify areas where personnel exceed, meet, or fail to meet the minimum level required/desired using the included dashboards. This information can be used to create a development plan for areas of deficiency or areas where improvement is desired for career growth.

As an alternative, you can assess VMI personnel using their job descriptions. Tab 2.7.3 of the Tools and Templates Compendium is set up to perform this type of analysis and create a plan for improvement when needed. Unlike Tabs 2.7.1 and 2.7.2, however, the assessment does not provide a dashboard for all employee evaluations. Tab 2.7.3 is intended to focus on the different roles and responsibilities for each employee versus the VMI as a whole.

Lastly, you can use Tab 2.7.4 to evaluate potential VMI personnel during the interview process. Load the roles and responsibilities into the template, and evaluate all the candidates on the same criteria. A dashboard at the bottom of the template quantifies the number of instances each candidate exceeds, meets, and fails to meet the criteria. Used together, the evaluation matrix and dashboard will make it easier to identify each candidate’s strengths and weaknesses (and ultimately select the best new VMI team member).

Step 3.8 – Improve professional skills

Increase proficiency in a few key areas

The image contains an a screenshot example to demonstrate how to increase proficiency in a few key areas.

To be an effective member of the VMI requires proficiency in many areas. Some basic skills like computer skills, writing, and time management are straightforward. Others are more nebulous. The focus of this step is on a few of the often-overlooked skills lurking in the shadows:

  • Communication
  • Running a meeting
  • Diplomacy
  • Emotional intelligence quotient (EQ)
  • Influence and persuasion
  • Building and maintaining relationships

For the VMI to be viewed as a strategic and integral part of the organization, these skills (and others) are essential. Although this blueprint cannot cover all of them, some leading practices, tips, and techniques for each of the skills listed above will be shared over the next several pages.

Step 3.8 – Improve professional skills

Communicate more effectively

Communication is the foundational element for the other professional skills covered in this Step 3.8. By focusing on seven key areas, you can improve your relationships, influence, emotional intelligence quotient, diplomacy, and impact when interacting with others. The concepts for the seven focal points presented here are the proverbial tip of the iceberg. Continue learning about these areas, and recognize that mastering each will require time and practice.

  1. Writing.
    1. Stick with simple words;1 you’re trying to communicate, not impress people with your vocabulary.
    2. Keep your sentences simple;1 use short words, short sentences, and short paragraphs.2
    3. Read your writing aloud;1 If you have to take a breath while reading a sentence out loud, the sentence is too long.
    4. Use a tool like Grammarly or the built-in functionality of Word to determine readability; aim for a score of 60 to 70 or a seventh- or eighth-grade level.3
    5. When reviewing your writing: consider your word choice and the implications of your words; look for unintended interpretations, ambiguities, and implied-tone issues.
1 Grammarly, 2017. 2 Elna Cain, 2018. 3 Forbes, 2016.

Step 3.8 – Improve professional skills

Communicate more effectively (continued)

2. Speaking

  1. Similar to writing, focus on short words and sentences. Avoid run-on sentences.
  2. Think before speaking and work on eliminating “ums,” “uhs,” and “you knows.” These detract from your message.
  3. Choose words that are “comfortable” for the other person/people. Rule number one in public speaking is to know your audience, and that rule applies beyond public speaking and to groups of all sizes (1 to 1,000+).
  4. Don’t confuse the words with the message.
  5. Pay attention to your tone, pace, and volume. Try to match your counterpart in one-on-one settings.

3. Body Language.

  1. Understand body language’s limitations; it is part art and part science…not an absolute.
  2. Individual movements and movement clusters can provide information regarding the spoken message – look for consistencies and inconsistencies. A baseline for the person is needed to interpret the body language “accurately.”
  3. Pay attention to your own body language. Does it match the message being conveyed by your words or those of your teammates (in group settings)?

Step 3.8 – Improve professional skills

Communicate more effectively (continued)

4. Personality.

  1. Identify your counterpart’s personality: Are they extroverted or introverted? Are they effusive or reserved? Are they diplomatic or offensive? Are they collaborative or looking to blame someone?
  2. Appeal to their personality type when possible, but avoid the blame game. For example, don’t be loud and “over the top” with someone who is reserved and quiet.

5. Style.

  1. Determine your counterpart’s style for both written and spoken communications: Are they direct or indirect? Are they bottom-line or do they prefer descriptions and build-ups? Are they into empirical data or anecdotal examples?
  2. To maximize the connection and communication effectiveness, match their style…even if it means getting out of your comfort zone a little. For example, if you have an indirect style, you will have to be more direct when dealing with someone who is direct; otherwise, you run the risk of alienating your counterpart (i.e. they will get frustrated or bored, or their mind will wander).

Step 3.8 – Improve professional skills

Communicate more effectively (continued)

6. Learning

  1. People absorb information in three ways:
    1. Visually: These learners need to see things for them to make sense and be retained.
    2. Auditory: These learners need to hear things for them to make sense and be retained.
    3. Kinesthetic/experiential: These learners need to do something or experience it to understand and retain it.
  2. While some people are dominant in one area, most are a combination of one or more methods.
  3. If you can identify a person’s preferred method of learning, you can enhance your ability to communicate. For example, talking (exclusively) with a visual learner will be minimally effective; showing that person a picture or graph while talking will increase your effectiveness.

7. Actions and inactions.

  1. Communication goes beyond words, messages, body language, and other issues. Your actions or inactions following a communication can undo your hard work to communicate effectively.
  2. Follow through on promises, action items, or requests.
  3. Meet any deadlines or due dates that result from communications. This helps build trust.
  4. Make sure your follow-through items are complete and thorough. Half-way is no way!
  5. Communicate any delays in meeting the deadlines or due dates to avoid

Step 3.8 – Improve professional skills

Tap into your inner diplomat

Diplomacy can be defined many ways, but this one seems to fit best for the purposes of vendor management: The ability to assert your ideas or opinions, knowing what to say and how to say it without damaging the relationship by causing offense.1 At work, diplomacy can be about getting internal or external parties to work together, influencing another party, and conveying a message tactfully. As a vendor manager, diplomacy is a necessary skill for working with your team, your organization, and vendors.

To be diplomatic, you must be in tune with others and understand many things about them such as their feelings, opinions, ideas, beliefs, values, positions, preferences, and styles. To achieve this, consider the following guidance:2

  • Modify your communication style: Communication is about getting someone to understand and evaluate your message so they can respond. Approach people the way they want to be approached. For example, sending an email to a person who prefers phone calls may create a communication issue.
  • Choose your words carefully: Use words as an artist uses a brush, paint, and a canvas. Paint a picture through word selection. Similar words can portray different scenes (e.g. the child ran to the store quickly vs. the child raced to the store). Make sure your image is relatable for your counterpart.
1 “The Art of Tact and Diplomacy,” SkillsYouNeed 2 Communiqué PR, 2020.

Step 3.8 – Improve professional skills

Tap into your inner diplomat (continued)

  • Slow down a speak concisely: Say what you have to say…and stop. No one likes a communicator who rambles on and on. Once your message has been conveyed, go into silent mode. Get comfortable with silence; there is no need to fill the void with more meaningless words. Let your counterpart contemplate in peace.
  • Listen to understand: Be an active listener rather than biding your time until you can talk again. Avoid interrupting the other party (whenever possible, but sometimes it is needed!). Show interest in what the other person is saying and ask clarifying questions. Make eye contact, nod your head periodically, and summarize what you hear from time to time. Use your ears and mouth in proportion: listen twice as much as you talk.
  • Consider nonverbals: Read the facial expressions of the speaker and be aware of your own. Faces tend to be expressive; sometimes we are aware of it…and sometimes we aren’t. Try relaxing your face and body to minimize the involuntary expressions that may betray you. Adopt a diplomatic facial expression and practice using it; find the right mix of interest and neutrality.

Whenever things get tense, take a deep breath, take a break, or stop the communication (based on the situation and what is appropriate). Being diplomatic can be taxing, and it is better to step back than to continue down a wrong path due to stress, emotion, being caught off guard, etc.

Step 3.8 – Improve professional skills

Build and maintain relationships

Relationship building and networking cannot be overvalued. VMI personnel interact with many areas and people throughout the organization, and good relationships are essential. Building and maintaining relationships requires hard work and focusing on the right items. Although there isn’t a scientific formula or a mathematical equation to follow, key elements are present in all durable relationships.

Focus on building relationships at all levels within your organization. People at every level may have data or information you need, and your relationship with them may be the deciding factor in whether you get the information or not. At other times, you will have data and information to give, and the relationship may determine how receptive others are to your message. Some relationship fundamentals are provided below and continue on the next page.1,2

  • Trust: be honest and ethical and follow through on your commitments.
  • Diversity: build relationships with people who aren’t just like you to expand your mindset.
  • Interrelatedness: understand how what you do impacts others you have relationships with.
  • Varied interaction: a good relationship will incorporate work-related interactions with personal interactions.
  • Effective communication: combine methods of communication but focus on the other person’s preferred method.
1 ”Seven Characteristics of Successful Work Relationships,” 2006. 2 Success.com, 2022.

Step 3.8 – Improve professional skills

Build and maintain relationships (continued)

  • Empathy – understand where the other person is coming from through active listening.
  • Vulnerability – create a judgment-free zone.
  • Respect – this must be given and earned.
  • Real face time – meeting in the offline world signals to the person that they are important (but this is not always possible today).
  • A giving-first mentality – provide something of value before asking for something in return.
  • Unique perspective – tap into what the other person believes and values.
  • Intent – start with genuine interest in the other person and the relationship.
  • Hard work – active engagement and a commitment to the relationship are required.
  • Honesty – be honest in your communications.
  • Challenge – be open to thinking differently and trying new things.
  • Value – identify what you add to the relationship.
  • Conscientiousness – be aware of the relationship’s status and react accordingly.

Step 3.8 – Improve professional skills

Run meetings more efficiently and effectively

Most people don’t get excited about meetings, but they are an important tool in the toolbox. Unfortunately, many meetings are unnecessary and unproductive. As a result, meeting invites often elicit an audible groan from invitees. Eliminating meetings completely is not a practical solution, which leaves one other option: improving them.

You may not be in charge of every meeting, but when you are, you can improve their productivity and effectiveness by making a few modifications to your approach. Listed below are ten ideas for getting the most out of your meetings:*

  1. Begin with the mindset that you are a steward or protector of the meeting attendees’ time, and you never want attendees to feel that you wasted their time.
  2. Keep the attendee list to essential personnel only. Everyone attending the meeting should be able to justify their attendance (or you should be able to justify it).
  3. Set an appropriate time limit for the meeting. Don’t default to the 60-minute meeting; right-size the meeting time (e.g. 15, 30, or 45 minutes or some other number). Shorter meeting times force participants to focus.
  4. Create and use an agenda. To help you stay focused and to determine who to invite, set up the agenda as a list of questions rather than a list of topics.
*Adapted from “The Surprising Science Behind Successful Remote Meetings” by Steven G. Rogelberg

Step 3.8 – Improve professional skills

Run meetings more efficiently and effectively (continued)

5. Use video when anyone is attending virtually. This helps prevent anonymity and increases engagement.

6. Start and end meetings on time. Running over impacts other meetings and commitments; it also makes you look ineffective and increases stress levels for attendees.

7. If longer meetings are necessary, build in a short break or time for people to stand up and stretch. Don’t say, “If you need a break or to stand up during the meeting, feel free.” Make it a planned activity.

8. Keep others engaged by facilitating and drawing specific people into the conversation; however, don’t ask people to contribute on topics that they know nothing about or ask generally if anyone has any comments.

9. Leverage technology to help with the meeting; have someone monitor the chat for questions and concerns. However, the chat should not be for side conversations, memes, and other distractions.

10. End the meeting with a short recap, and make sure everyone knows what was decided/accomplished, what next steps are, and which action items belong to which people.

Step 3.8 – Improve professional skills

Increase emotional intelligence

Emotional intelligence (otherwise known as emotional intelligence quotient or EQ) is the ability to understand, use, and manage your own emotions in positive ways to relieve stress, communicate effectively, empathize with others, overcome challenges and defuse conflict.1 This is an important set of skills for working with vendors and internal personnel. Increasing your EQ will help you build better relationships and be seen as a valuable teammate…at all levels within your organization.

Improving this skill dovetails with other skills discussed in this step 3.8, such as communication and diplomacy. Being well versed in the concepts of EQ won’t be enough. To improve requires a willingness to be open – open to feedback from others and open to new ideas. It also requires practice and patience. Change won’t happen overnight, but with some hard work and perseverance, your EQ can improve.

There are many resources that can help you on your journey, and here are some tips to improve your EQ:2

  • Practice observing how you feel.
  • Pay attention to how you behave.
  • Learn to look at yourself objectively.
  • Understand what motivates you.
  • Acknowledge your emotional triggers.
  • Be interested in the subject matter.
1 HelpGuide, 2022. 2 RocheMartin, 2022.

Step 3.8 – Improve professional skills

Increase emotional intelligence (continued)

Tips to improve your EQ (continued from previous page):

  • It’s your choice how you react to a situation.
  • Listen without interruption, preconceptions, or skepticism; absorb their situation and consider how they are feeling before you react.
  • Try to be approachable and accessible.
  • Think about what’s happening from their perspective.
  • Cultivate a curiosity about strangers to understand different opinions, views, and values.
  • Acknowledge what people are saying to show you are actively listening.
  • Think about how you’re physically coming across with your body language, tone of voice, eye contact, and facial expressions.

Things to avoid:1

  • Drama – don’t let others’ emotions affect or rule yours.
  • Complaining – don’t be a victim; do look for solutions.
  • Dwelling on the past – learn from the past and live in the present.
  • Selfishness – consider others’ needs, not just your own.
  • Being overly critical – understand the other person, then communicate the change you want to see.
1 RocheMartin, 2022.

Step 3.8 – Improve Professional Skills

Use Influence and Persuasion to Benefit the VMI

Skills such as influence and persuasion are important (even necessary) for vendor managers. (Don’t confuse this with the dark arts version – manipulation.) A good working definition is provided by the Center for Creative Leadership: Influence is the ability to affect the behavior of others in a particular direction, leveraging key tactics that involve, connect, and inspire them.* Influence and persuasion are not about strongarming or blackmailing someone to get your way. Influence and persuasion are about presenting issues, facts, examples, and other items in a way that moves people to align with your position. Sometimes you will be attempting to change a person’s mind, and other times you will be moving them from a neutral stance to agreeing to support your position.

Building upon the basic communication skills discussed at the start of this step, there are some ways to improve your ability to influence and persuade others. Here are some suggestions to get you started:*

  1. Develop organizational intelligence – learn how your organization truly operates; identify the power brokers and their spheres of control and influence. Many failures to persuade and influence stem from not understanding who can help and how they can help (or hinder) your efforts. The most influential person in your organization may not be the person with the fancy title.
  2. Promote yourself and the team – don’t be afraid to step into the spotlight and demonstrate your knowledge and expertise. To be able to persuade and influence as and individual or a team, credibility must be established.
* Center for Creative Leadership, 2020.

Step 3.8 – Improve professional skills

Use influence and persuasion to benefit the VMI (continued)

3. Build and maintain trust – trust has two main components: competency and character. In item 2 on the previous page, competency trust was discussed from the perspective of knowledge and expertise. For character trust, you need to be viewed as being above reproach. You are honest and ethical; you follow through and honor your commitments. Once both types of trust are in place, eyes and ears will be open and more receptive to your messages. Bottom line: You can’t influence or persuade people if they don’t trust you.

4. Grow and leverage networks – the workplace is a dynamic atmosphere, and it requires almost constant networking to ensure adequate contacts throughout the organization are maintained. Leveraging your network is an artform, and it must be used wisely. You don’t want to wear out your welcome by asking for assistance too often.

As you prepare your plan to influence or persuade someone, ask yourself the following questions:*

  • Who am I attempting to influence?
  • What is the situation and how much support do I need?
  • Why do I need this person’s support for my idea?
  • What tactics can I use, and how can I establish rapport?
  • What responses do I anticipate?
  • What mutual points of agreement can I use?
  • How can I end on a positive note no matter what the outcome is?
* Center for Creative Leadership, 2020.

Step 3.9 – Expand professional knowledge

Learn more about departments and functions tangential to the VMI

To function in their roles, VMI personnel must be well versed in the concepts and terminology associated with vendor management. To be strategic and to develop relationships with other departments, divisions, agencies, and functional groups, VMI personnel must also be familiar with the concepts and terminology for functions outside the VMI. Although a deep dive is beyond the scope of this blueprint, understanding basic concepts within each of the topics below is critical:

  • Finance and accounting
  • Project management
  • Contracts and contract management
  • Procurement/sourcing
  • Change management
  • Conflict management
  • Account team dynamics

It isn’t necessary to be an expert in these subjects, but VMI personnel must be able to talk with their peers intelligently. For example, a vendor manager needs to have a general background in contract terms and conditions to be able to discuss issues with legal, finance, procurement, and project management groups. A well-rounded and well-versed VMI team member can rise to the level of trusted advisor and internal strategic partner rather than wallowing in the operational or transactional world.

Step 3.9 – Expand professional knowledge

Understand finance and accounting basics

Finance and accounting terms and concepts are commonplace in every organization. They are the main language of business – they are the way for-profit businesses keep score. Regardless of whether your organization is a for-profit, non-profit, governmental, or other entity, finance and accounting run through the veins of your organization as well. In addition to the customer side of the equation, there is the vendor side of the equation: Every vendor you deal with will be impacted financially by working with you.

Having a good grasp of finance and accounting terms and concepts will improve your ability to negotiate, talk to finance and accounting personnel (internal and external), conduct ongoing due diligence on your critical vendors, review contracts, and evaluate vendor options, to name just a few of the benefits.

The concepts listed on the following pages are some of the common terms applicable to finance and accounting. It is not intended to be an exhaustive list. Continue to learn about these concepts and identify others that allow you to grow professionally.

Step 3.9 – Expand professional knowledge

Understand finance and accounting basics (continued)

Finance and accounting terms and concepts

  • Cash accounting vs. accrual accounting.
  • Fiscal year vs. calendar year.
  • Profit vs. cash flow.
  • Fixed expenses vs. variable expenses.
  • Capital expense (CapEx) vs. operating expense (OpEx).
  • Depreciation vs. amortization.
  • Payment upfront vs. payment in arrears.
  • Favorable (positive) variance vs. unfavorable (negative) variance.
  • Discretionary expense (cost/expenditure) vs. non-discretionary expense (cost/expenditure).
  • Income statement and its components.
  • Balance sheet and its components.

Step 3.9 – Expand professional knowledge

Understand finance and accounting basics (continued)

Finance and accounting terms and concepts (cont’d)

  • Operating profit margin.
  • Net profit margin.
  • Return on assets.
  • Current ratio.
  • Quick ratio.
  • Debt-to-asset ratio.
  • Interest coverage.
  • Total asset turnover.
  • Receivables turnover.
  • Average collection period.
  • Inventory turnover.
  • Time value of money concept.
  • Future value (FV).
  • Present value (PV).
  • Net present value (NPV).
  • Cost of capital.
  • Internal rate of return (IRR).
  • Return on investment (ROI).
  • Payback (payback period or break even).

Step 3.9 – Expand professional knowledge

Understand project management basics

The image contains a screenshot example of expanding professional knowledge.

Whether your organization has a formal project management office (PMO) or not, project management practices are being used by those tasked with making sure software and software as a service implementations go smoothly, technology refreshes are rolled out without a hitch, and other major activities are successful. Listed below are some common competencies/skills used by project managers to make sure the job gets done right.

  1. Requirements – define the project’s goals, objectives, and requirements.
  2. Scope – develop, monitor, and manage the project’s scope.
  3. Time – develop and manage the timeline and determine the order (parallel and sequential) for the tasks and activities.
  4. Budget – create and manage the project budget and report on any variances.
  5. Resources – manage space, people, software, equipment, services, etc.
  6. Risk – identify, evaluate, monitor, and manage project risk.
  7. Change – manage updated requirements, changes to the scope, and modifications to the contract.
  8. Documentation – work with the project charter, open issue logs, meeting minutes, and various reports.
  9. Communication – communicate with vendor personnel and internal personnel, including stakeholders and executives as needed.
  10. Quality – ensure the deliverables and other work are acceptable and coordinate/conduct acceptance tests.

Step 3.9 – Expand professional knowledge

Understand project management basics (continued)

The image contains a screenshot of understanding project management basics.

The concepts listed below are common project management terms and concepts.1, 2 This list is not intended to be exhaustive. Look internally at your project management processes and operations to identify the concepts applicable in your environment and any that are missing from this list.
  • Project plan
  • Work breakdown structure (WBS)
  • Critical path
  • Project manager
  • Project stakeholder
  • Agile project
  • Waterfall project
  • Milestone
  • Deliverable
  • Dependency
  • Phase
  • Kickoff meeting
  • Project budget
  • Project timeline
  • Resource allocation
  • Project risk
  • Risk management
  • Risk owner
  • Issue log
  • Gantt chart
1 nTask, 2019. 2 Whiz Labs, 2018.

Step 3.9 – Expand professional knowledge

Understand contracts and contract lifecycle management basics

Contracts and contract lifecycle management (CLM) are two separate but related topics. It is possible to have contracts without a formal CLM process, but you can’t have CLM without contracts. This portion of step 3.9 provides some general background on each topic and points you to blueprints that cover each subject in more detail.

IT contracts tend to be more complicated than other types of contracts due to intellectual property (IP) rights being associated with most IT contracts. As a result, it is necessary to have a basic understanding of IP and common IT contract provisions.

There are four main areas of IP: copyrights, patents, trademarks, and trade secrets. Each has its own nuances, and people who don’t work with IP often mistake one for another or use the terms interchangeably. They are not interchangeable, and each affords a different type of protection when available (e.g. something may not be capable of being patented, but it can be copyrighted).

For contract terms and conditions, vendor managers are best served by understanding both the business side and the legal side of the provisions. In addition, a good contract checklist will act as a memory jogger whether you are reviewing a contract or discussing one with legal or a vendor. For more information on contract provisions, checklists, and playbooks, download the Info-Tech blueprints identified to the left.

Download the Info-Tech blueprint Understand Common IT Contract Provisions to Negotiate More Effectively

Download the Info-Tech blueprint Improve Your Statements of Work to Hold Your Vendors Accountable

Step 3.9 – Expand professional knowledge

Understand contracts and contract lifecycle management basics (continued)

CLM is a process that helps you manage your agreements from cradle to grave. A robust CLM process eases the challenges of managing hundreds or even thousands of contracts that affect the day-to-day business and could expose your organization to various types of vendor-related risk.

Managing a few contracts through the contracting process is easy, but as the number of contracts grows, managing each step of the process for each contract becomes increasingly difficult and time consuming. That’s where CLM and CLM tools can help. Here is a high-level overview of the CLM process:

  1. Request – a request for a contract is initiated.
  2. Create contract – the contract is drafted by the customer or provided by the vendor.
  3. Review risk – areas of risk in the contract are identified.
  4. Approve – base agreement and attachments are approved and readied for negotiations.
  5. Negotiate – the agreement is negotiated and finalized.
  6. Sign – the agreement is signed or executed by the parties.
  7. Capture – the agreement is stored in a centralized repository.
  8. Manage – actively manage the operational and commitment aspects of the agreement.
  9. Monitor compliance – ensure that each party is honoring and complying with its obligations.
  10. Optimize – review the process and the contracts for potential improvements.

For more information on CLM, download the Info-Tech blueprint identified to the left.

Download the Info-Tech Blueprint Design and Build an Effective Contract Lifecycle Management Process

Step 3.9 – Expand professional knowledge

Understand procurement/sourcing basics

Almost every organization has a procurement or sourcing department. Procurement/sourcing is often the gatekeeper of the processes used to buy equipment and services, lease equipment, license software, and acquire other items. There are many different types of procurement/sourcing departments and several points of maturity within each type. As a result, the general terms listed on the next page may or may not be applicable within your organization. (Or your organization may not have a procurement/sourcing department at all!)

Identifying your organization’s procurement/sourcing structure is the best place to start. From there, you can determine which terms are applicable in your environment and dive deeper on the appropriate concepts as needed.

Step 3.9 – Expand professional knowledge

Understand procurement/sourcing basics (continued)

Procurement sourcing terms and concepts

  • Hard dollar savings
  • Soft dollar savings
  • Cost avoidance
  • Value creation
  • Value created
  • Addressable spend
  • Spend addressed
  • Revenue creation
  • Category management
  • Category manager
  • Targeted negotiations
  • Indirect procurement/sourcing
  • Direct procurement/sourcing
  • Sourcing/procurement processes
  • Sourcing/procurement drivers and metrics
  • RFX (RFP, RFI, RFQ) processes
  • Forecasting value creation
  • Percentage of value creation to spend addressed
  • Category opportunity
  • Category plans
  • Center-led procurement/sourcing
  • Centralized procurement/sourcing
  • Decentralized procurement/sourcing

Step 3.9 – Expand professional knowledge

Understand conflict management basics

Whether you consider conflict management a skill, knowledge, or something in between, there is no denying that vendor managers are often engaged to resolve conflicts and disputes. At times, the VMI will be a “disinterested third party,” sitting somewhere between the vendor and an internal department, line of business, agency, or other functional designation. The VMI also may be one of the parties involved in the dispute or conflict. As a result, a little knowledge and a push in the right direction will help you learn more about how to handle situations where two parties don’t agree.

To begin with, there are four levels of “formal” dispute resolution. You may be intimately aware of all of them or only have cursory knowledge of how they work and the purpose they serve:

  • Negotiation
  • Mediation
  • Arbitration
  • Litigation

Their use often can be controlled or limited either contractually or by your organization’s preferences. They may be exclusive or used in combination with one another (e.g. negotiation first, and if things aren’t resolved, arbitration). Look at your contracts and legal department for guidance. It’s important to understand when and how these tools are used and what is expected (if anything) from the VMI.

Step 3.9 – Expand professional knowledge

Understand conflict management basics (continued)

The image contains a screenshot of The Thomas-Kilman Conflict Resolution Model.

Another factor in the conflict management and informal dispute resolution process is the people component. Perhaps the most famous or well-known model on this topic is the Thomas-Kilmann conflict resolution model. It attempts to bring clarity to the five different personality types you may encounter when resolving differences. As the graphic indicates, it is not purely a black-and-white endeavor; it is comprised of various shades of grey.

The framework presented by Mr. Thomas and Mr. Kilmann provides insights into how people behave and how to engage them based on personality characteristics and attributes. The model sorts people into one of five categories:

  • Avoiders.
  • Competitors.
  • Collaborators.
  • Accommodators.
  • Compromisers.

Although it is not an absolute science since people are unpredictable at times, the Thomas-Kilmann model provides great insights into human behavior and ways to work with the personality types listed.

*Kilmann Diagnostics, 2018.

Step 3.9 – Expand professional knowledge

Understand conflict management basics (continued)

Although the topic is vastly greater than being presented here, the last consideration is a sound process to follow when the conflict or dispute will be handled informally (at least to start). The simple process presented below works with vendors, but it can be adapted to work with internal disputes as well. The following process assumes that the VMI is attempting to facilitate a dispute between an internal party and a vendor.

Step 1. Validate the person and the issue being brought to you; don’t discount the person, their belief, or their issue. Show genuine interest and concern.

Step 2. Gather and verify data; not all issues brought forward can be pursued or pursued as presented. For example, “The vendor is always late with its reports” may or may not be 100% accurate as presented.

Step 3. Convert data gathered into useful and relatable information. To continue the prior example, you may find that the vendor was late with the reports on specified dates, and this can be converted into “the vendor was late with its reports 50% of the time during the last three months.”

Step 3.9 – Expand professional knowledge

Understand conflict management basics (continued)

Step 4. Escalate findings internally to the appropriate stakeholders and executives as necessary so they are not blindsided if a vendor complains or goes around you and the process. In addition, they may want to get involved if it is a big issue, or they may tell you to get rid of it if it is a small issue.

Step 5. Engage the vendor once you have your facts and present the issues without judgment. Ask the vendor to do its own fact gathering.

Step 6. Schedule a meeting to review of the situation and hear the vendor’s version of the facts…they may align, or they may not.

Step 7. Resolve any differences between your facts/information and the vendor’s. There may be extenuating circumstances, oversights, different data, or other items that come to light.

Step 8. Attempt to resolve the problem and prevent further occurrences through root cause analysis and collaborative problem-solving techniques.

Develop your own process and make sure it stays neutral. The process should not put the vendor (or any party) on the defensive. The process is to help the parties reach resolution…not to assign blame.

Step 3.9 – Expand professional knowledge

Understand account team management basics

Working with the account or sales team from your critical vendors can be challenging. A basic understanding of account team operations and customer/vendor dynamics will go a long way to improving your interactions (and even vendor performance) over time.

Sales basics

  • Salespeople are typically paid a base salary and a commission on each sale.
  • Salespeople have quotas that must be met; failure to meet the quota results in probation (at a minimum) or termination.
  • Salespeople sell what they are motivated to sell; the motivation comes in the way of contests, commissions, and recognition. The commission structure is not the same for every service or product sold by the vendor. In addition, incentives may be created to move old product, overstock, or new product (to name a few).
  • Salespeople have multiple goals when interacting with customers:
    • Sell
    • Gather information
    • Build a relationship
    • Get a reference
    • Obtain a reference
    • Increase the vendor’s footprint

Step 3.9 – Expand professional knowledge

Understand account team management basics (continued)

Improving sales and account team dynamics with your organization

  • Conduct due diligence on your account team. Are they “qualified” to work with your account?
  • Set expectations with the account team for the ongoing relationship. Don’t leave it to chance.
  • Evaluate the sales and account teams at least annually. Get feedback from those who work closely with the salespeople and account managers, including stakeholders and executives.
  • Educate people internally about the sales process. At a minimum, counsel them to avoid giving away leverage, answering “damaging” questions, and disclosing confidential information.
  • Try to get involved early in the sales cycle. Sell your value to internal personnel.
  • Work to convert your account manager into your champion within the vendor. The salesperson can benefit by going to bat for you even though they work for the vendor. The commission structure often creates a split loyalty issue. Capitalize on it!
  • Watch out for high turnover. This can indicate a problem at the vendor OR your account is not that attractive/profitable. (See steps 2.2 and 3.1 regarding customer positioning.)

Step 3.9 – Expand professional knowledge

Understand account team management basics (continued)

Improving sales and account team dynamics with your organization (continued)

  • Support effective sales reps by educating them on your organization, the best way to work with you, and the benefits of working with your processes. If they do something above and beyond, consider sending them a thank-you and copying their boss. Little things go a long way.
  • Control the sales process. Require qualified people from your organization to be invited to meetings; require an agenda for those meetings; and avoid “surprise” meetings (those meetings with limited notice and no agenda… "My boss is in town today, and I wanted to stop by and introduce her to you").
  • Don’t be afraid to request a new account manager. For your critical vendors, you should always be dealing with competent account teams. They should have the requisite knowledge of their products and services to be able to answer basic through intermediate questions; they should be ethical; and they should be responsive.
  • Build relationships beyond the salesperson or account manager. Develop a network that extends throughout the sales organization. (For example, the sales manager, sales director, and sales vice president at a minimum.) These people generally have more sway within the vendor organization and can get things done when the need arises.

For more information on this topic, download the Info-Tech blueprint Evaluate Your Vendor Account Team to Optimize Vendor Relations.

Step 3.10 – Create brand awareness

Determine whether a brand makes sense for the VMI

Branding isn’t just for companies. It is for departments (or whatever you call them at your place of employment) and individuals working in those departments. With a little work and even less money, you can create a meaningful brand for the VMI. While you are at it, you may want to encourage the VMI’s team members to focus a little attention on their personal brands since the VMI and its personnel are intertwined. First, let's define “brand.”

Ask 50 people, “How do you define ‘brand’?” and you are likely to get 50 different answers. For the purposes of this blueprint, the following definition provides some guiderails by describing what a brand is and isn’t: “A brand is not a logo. A brand is not an identity. A brand is not a product. A brand is a person’s gut feeling about a product, service, or organization.”1 Let’s expand the definition of “a brand is…” to include departments and individuals since that’s the focus of this step, and it doesn’t violate the spirit of the original definition. A further expansion could include the goodwill associated with the product, service, organization, department, or individual.

Dedicating time and other resources to proactively creating and nurturing the VMI’s brand has many advantages:

  • “If you don’t define your brand, others will.”2 This is your chance to define the VMI’s narrative and influence the perception others have of it.
  • It allows VMI team members to feel connected to the VMI’s vision and goals during their day-to-day activities.
  • It helps form an emotional connection between the VMI and your internal “clients.”
  • “Branding is a way of establishing and consistently reinforcing who you are and what you [do]…”2 Your brand helps you promote the VMI’s value and impact.
1 Emotive Brand, 2019. 2 Forbes, 2018.

Step 3.10 – Create brand awareness

Establish the VMI’s brand and monitor it

As you embark on creating a brand for the VMI and raising awareness, here are a few considerations to keep in mind:

  • Identify your mission.* Review the VMI’s mission statement and goals. Translate them into statements that connect with your internal clients.
  • Establish your unique value proposition.* What does the VMI provide to your internal clients that would make them go out of their way to use your services? How can you help them in ways others can’t?
  • Create your brand’s visual identity.* Can you create a logo for the VMI? Can you provide a consistent look and feel for the reports you generate and information you provide?
  • Increase brand recognition.* It takes time to build trust and establish a reputation. The same is true of creating a brand and increasing its recognition. Develop a plan for this rather than leaving it to chance.
  • Be consistent. Make sure your brand is consistent with the organization’s brand or at least doesn’t contradict it. The VMI’s brand is based on its values, mission, goals, and other items; these should complement the organization’s values, mission, goals, and other items.
  • Spread the word. Attend internal clients’ staff meetings, conduct lunch & learn sessions, send out a newsletter to ensure that your internal clients know who you are, what you do, and the impact you can make or have made. Make personal connections whenever possible.
  • Monitor your brand. It is not enough to create a brand and turn it loose unsupervised. Seek feedback on the VMI and its brand beyond the internal survey (step 3.11), and adjust your brand periodically as needed.
* Stevens & Tate, 2019.

Step 3.10 – Create brand awareness

Enhance the brand of VMI team members

As previously mentioned, brands are for individuals as well. In fact, everybody has a brand associated with them…for better or worse...whether they have consciously created and molded it or not. Focusing on the individual brand at this point offers the VMI and its team members the opportunity to enhance the brand for both. After all, the VMI is a reflection of its personnel.

Here are some things VMI team members can do to enhance their brand:

  • Network internally beyond your immediate team.1 Get to know people and build relationships with others even if you don’t work directly or indirectly with them.
  • Say yes to relevant opportunities.1 Volunteer for projects where you can make an impact and let others see your value; it’s also a good way to build relationships beyond your immediate team.
  • Speak at a conference. According to Jeff Butler (author and TEDx speaker), “Speaking gets you that immediate credibility not only internally but also externally where other companies are now seeing you as an expert.” He also states that “speaking at … conferences is not only good for you but also good for your [organization].”1
  • Share your voice.1 Become a resource for bloggers, authors, and podcasters; consider blogging, writing, and podcasting. Remember not to disclose any proprietary or confidential information, though! Work with your legal and marketing departments before embarking on this path.
  • Set goals and monitor your progress. Track the number of times you are asked to speak or contribute to a blog, podcast, event, or article, and track the number of times you are mentioned or referenced in social media, blogs, articles, and podcasts.2
1 Forbes, 2018. 2 Oberlo, 2022.

3.10.1 – Create brand awareness

30 – 90 Minutes

  1. Meet with the participants to review the information in Elevate – Tools and Templates Compendium – Tab 3.10. The worksheet is divided into two parts.
    1. Part 1 is for the VMI to use to create a brand, and
    2. Part 2 is for an individual VMI team member to create a brand.
  2. For Part 1, work as a team to answer the questions to begin identifying components of your brand awareness and building a strategy for the VMI's brand.
  3. For Part 2, individuals can work by themselves or with the team leader to answer the questions and set goals to help build an individual brand (if it is desirable).
InputOutput
  • Elevate – Tools and Templates Compendium – Tab 3.10
  • Brainstorming
  • VMI brand framework
  • Individual VMI personnel brand framework
MaterialsParticipants
  • Elevate – Tools and Templates Compendium – Tab 3.10
  • VMI team

Download the Info-Tech Elevate - Tools and Templates Compendium

Step 3.11 – Survey internal clients

Gain insights and feedback from internal sources

As you deploy your surveys, timing must be considered. For annual surveys, avoid busy seasons such as mid to late December (especially if your organization’s fiscal year is a calendar year). Give people time to recover from any November holidays, and survey them before they become distracted by December holidays (if possible). You may want to push the annual survey until January or February when things have settled back into a normal routine. Your needs for timing and obtaining the results must be balanced against the time constraints and other issues facing the potential respondents.

For recency surveys, timing can work to your advantage or disadvantage. Send the survey almost immediately after providing assistance. If you wait more than a week or two, memories will begin to fade, and the results will trend toward the middle of the road.

Regardless of whether it is an annual survey or a recency survey, distributing the surveys to a big enough sample size will be tough. Combine that with low response rates and the results may be skewed. Take what you can get and look for trends over time. Some people may be tough critics; if possible, send the survey to the same people (and incorporate new ones) to see if the tough graders’ responses are remaining true over time. Another way to mitigate some of the tough critics is to review their answers to the open-ended questions. For example, a tough grader may respond with a “4 – helpful” when you were expecting a “5 – very helpful;” the narrative portion of the survey may be consistent with that answer, or it may provide what you were looking for: “The VMI was great to work with on this project.” When confined to a scale, some respondents won’t give the top value/assessment no matter what, but they will sing your praises in a question that requires a narrative response. Taken together, you may get a slightly different picture – one that often favors you.

Step 3.11 – Survey internal clients

Gain insights and feedback from internal sources (continued)

The image contains a screenshot of an example survey.

After you have received a few responses to your surveys (recency and annual), review the results against your expectations and follow up with some of the respondents. Were the questions clear? Were the answer choices appropriate? Ultimately, you have to decide if the survey provided the meaningful feedback you were looking for. If not, revise the questions and answers choices as needed. (Keep in mind, you are not looking for “feelgood fluff.” You are looking for feedback that will reinforce what you are doing well and show areas for improvement.)

Once you have the results, it’s time to share them with the executives and stakeholders. When creating a report, consider the following guidance:

  • Don’t just list the data; convert it to usable information.
  • When needed, provide some context and interpretation for the results. For example, if you have an internal goal or service level, indicate this and show how the results compare to the target (e.g. in a bar chart, insert a horizontal line and label it “target”).
  • Present the results on a question-by-question basis, but you may want to combine or aggregate results to provide meaningful information. For example, combine 21% responding with “doing a great job” and 62% responding with “doing a good job” into one statement of “83% of those surveyed said the VMI is doing a good job or doing a great job.”
  • Use an executive summary as an overview or to highlight the key findings, with the detailed data and information on subsequent pages for people who want to dive deeper.

Step 3.12 – Calculate VMI ROI

Identify and report the VMI’s value and impact on the organization

Calculating ROI begins with establishing baselines: what is the current situation? Once those are established, you can begin tracking the impact made by the VMI by looking at the differences between the baseline and the end result. For example, if the VMI is tracking money saved, it is critical to know the baseline amounts (e.g. the initial quote from the vendor, the budgeted amount). If time is being measured, it is important to understand how much time was previously spent on items (e.g. vendor meetings to address concerns, RFPs).

The blueprint Capture and Market the ROI of Your VMO will lead you through the process, but there are a couple of key things to remember: 1) some results will be quick and easy – the low-hanging fruit, things that have been ignored or not done well, eliminating waste, and streamlining inefficiencies; and 2) other things may take time to come to fruition. Be patient and make sure you work with finance or others to bring credibility to your calculations.

When reporting the ROI, remember to include the results of the survey from step 3.11. They are not always quantifiable, but they help executives and stakeholders see the complete picture, and the stories or examples make the ROI “personal” to the organization.

Reporting can be a challenge. VMIs often underestimate their value and don’t like self-promotion. While you don’t want to feel like you operate in justification mode, many eyes will be on the VMI. The ROI report helps validate and promote the VMI, and it helps build brand awareness for the VMI.

Step 3.13 – Implement vendor recognition program

Set your plan in motion

As indicated in step 2.10, take a “crawl, walk, run” approach to your vendor recognition program. Start off small and grow the program over time. Based on the scope of the program, decide how you’ll announce and promote it. Work with marketing, IT, and others to ensure a consistent message, to leverage technology (e.g. your website), and to maximize awareness.

For a formal program, you may want to hold a kickoff meeting to introduce the program internally and externally. The external kickoff can be handled in a variety of ways depending on available resources and the extent of the program. For example, a video can be produced and shared with eligible vendors, an email from the VMI or an executive can be used, or the program can be rolled out through BAMs if only BAM participants are eligible for the program. If you are taking an informal approach to the vendor recognition program, you may not need an external kickoff at all.

For a formal program, collect information periodically throughout the year rather than waiting until the end of the year; however, some data may not be available or relevant until the end of the measurement period. For subjective criteria, the issue of recency may be an issue, and memories will fade over time. (Be careful the subjective portion doesn’t turn into a popularity contest.)

If the vendor recognition program is not meeting your goals adequately, don’t be afraid to modify it or even scrap it. At some point, you may have to do a partial or total reboot of the program. Creating and maintaining a “lessons learned” document will make a reboot easier and better if it is necessary. Remember: While a vendor recognition program has many potential benefits, your main goals must be achieved or the program adds little or no value.

Phase 4 - Review

Ensure Your VMI Continues to Evolve

Phase 1

Phase 2

Phase 3

Phase 4

1.1 Review and update existing Plan materials

2.1 Vendor classification models

2.2 Customer positioning model

2.3 Two-way scorecards

2.4 Performance improvement plan (PIP)

2.5 Relationship improvement plan (RIP)

2.6 Vendor-at-a-glance reports

2.7 VMI personnel competency evaluation tool

2.8 Internal feedback tool

2.9 VMI ROI calculation

2.10 Vendor recognition program

3.1 Classify vendors and identify customer position

3.2 Assess the relationship landscape

3.3 Leverage two-way scorecards

3.4 Implement PIPs and RIPs

3.5 Gather market intelligence

3.6 Generate vendor-at-a-glance reports

3.7 Evaluate VMI personnel

3.8 Improve professional skills

3.9 Expand professional knowledge

3.10 Create brand awareness

3.11 Survey internal clients

3.12 Calculate VMI ROI

3.13 Implement vendor recognition program

4.1 Investigate potential alliances

4.2 Continue increasing the VMI’s strategic value

4.3 Review and update

This phase will walk you through the following activities:

This phase helps the VMI stay aligned with the overall organization, stay current, and improve its strategic value as it evolves. The main outcomes from this phase are ways to advance the VMI’s strategic impact.

This phase involves the following participants:

  • VMI team
  • Applicable stakeholders and executives
  • Others as needed

Phase 4 – Review

Continue evolving the VMI and keep it up to date

The emphasis of this final phase is on the VMI’s continued evolution.

  • First up is the concept of alliances. For a small number of vendors, your relationship has the ability to transcend to a different level. A collaborative, synergistic relationship can be achieved under the right circumstances.
  • Next, additional material on transforming the VMI from purely transactional to strategic is provided (along with some reminders from prior phases). To reach its full potential, the VMI must mature and evolve, but this won’t happen without the active management of a well-crafted plan. What got the VMI to this point won’t necessarily work to get you to the next point on the evolution scale.
  • Lastly, remember to stay vigilant about the review process. What is the VMI doing well? Where can it improve? What needs to change?

Step 4.1 – Investigate potential alliances

Understand what separates an alliance from a regular relationship

Chances are you’ve seen a marketing or business alliance at work in your personal life. If you’ve visited a Target store or a Barnes and Noble store, you’ve more than likely walked past the Starbucks counter. The relationship is about more than the landlord-tenant agreement, and the same business concept can exist in non-retail settings. Although they may not be as common in the customer-IT vendor space, alliances can work here as well.

Definition

For vendor management purposes, an alliance is a symbiotic relationship between two parties where both benefit beyond the traditional transactional (i.e. buyer-seller) relationship.

Characteristics

  • Each party remains independent; this is not a true partnership or joint venture from a legal perspective.
  • Each party obtains benefits they wouldn’t be able to obtain by themselves (or, at a minimum, the timeline is accelerated significantly).
  • The relationship is geared toward the long term, and each party contributes resources to achieve synergies.

Step 4.1 – Investigate potential alliances

Analyze benefits and risks for the alliance

Benefits

  • Synergies
  • Innovations
  • Use of pooled resources
  • Access to different areas of expertise
  • Quicker development or improvement of products or services
  • Competitive advantages, new revenue streams, and new markets

Risks

  • Cultural fit
  • Departing executives/sponsors
  • Return on investment pressures
  • Different interests or expectations
  • Failure to address intellectual property issues adequately
  • Lack of experience and process to manage the relationship

Step 4.1 – Investigate potential alliances

Set up the alliance for success

Keys to success

  • Communicate transparently.
  • Ensure executive participation from both parties.
  • Establish a joint steering committee and alliance governances.
  • Set clear expectations and define what each party wants out of the alliance.
  • Create “alliance managers” in addition to vendor managers and project mangers.
  • Start with a small alliance; don’t go all-in on a big alliance the first time you try it.
  • Create an environment of trust and collaboration; the alliance goes beyond the contract.
  • Make sure both parties are happy with their contributions to and rewards from the alliance.

The purpose of this step is not to make you an expert on alliances or to encourage you to rush out of your office, cubicle, bedroom, or other workspace looking for opportunities. The purpose is to familiarize you with the concepts, to encourage you to keep your eyes open, and to think about relationships from different angles. How will you make the most of your vendors’ expertise, resources, market, and other things they bring to the table?

Step 4.2 – Continue increasing the VMI’s strategic value

Grow the VMI’s impact over time

Although they are not synonymous concepts, increasing the VMI’s maturity and increasing the VMI’s strategic value can go hand in hand. Evolving the VMI to be strategic allows the organization to receive the greatest benefit for its investment. This isn’t to say that all work the VMI does will be strategic. It will always live in two places – the transactional world and the strategic world – even when it is fully mature and operating strategically. Just like any job, there are transactional tasks and activities that must be done, and some of them are foundational elements for being strategic (e.g. conducting research, preparing reports, and classifying vendors). The VMI must evolve and become strategic for many reasons: staying in the transactional world limits the VMI’s contributions, results, influence and impact; team members will have less job satisfaction and enjoyment and lower salaries; ultimately, the justification for the VMI could disappear.

To enhance the VMI’s (and, as applicable, its personnel’s) strategic value, continue:

  • Maturing the VMI and its personnel.
  • Building relationships internally and with the critical vendors (typically, high operational, high tactical, and strategic vendors under the COST model and valued and principal vendors under the MVP model).
  • Increasing your knowledge about vendor management and your critical vendors and their industries.
  • Saying yes to opportunities or volunteering for cross-functional teams that allow the VMI to showcase its abilities.
  • Increasing your knowledge of your organization, how it operates, the political environment, and anything else that will help the VMI provide information, insight, and guidance.
  • Learning about your industry and competitors (if applicable).

Step 4.2 – Continue increasing the VMI’s strategic value

Shift from transactional to strategic as much as possible

Indicators of a transactional VMI:

Indicators of a strategic VMI:

  • Exclusively reactive approach to operations
  • Focused exclusively on day-to-day operations
  • Internal clients are obligated to use the VMI due to policy
  • No perceived value-add; perceived as an administrative function
  • Left out of the RFP process or only have a limited role
  • Left out of the negotiation process or only have a limited role
  • VMI has a narrow reach and impact within the organization
  • Measure of value for the VMI is only quantitative
  • Metrics gathering without analysis and influential use
  • Personnel have limited skills, competencies, and knowledge
  • Proactive approach to operations
  • Focused on the big picture
  • Internal clients seek out or voluntarily consult the VMI
  • VMI is valued for its contributions and impact
  • Good relationships exist with vendors and stakeholders
  • Personnel possess high levels of skill, competency, and knowledge
  • VMI processes are integrated into the organization
  • VMI participates in business strategy development
  • VMI leads or is heavily involved in the RFP & negotiation processes
  • Relationship managers are assigned to all critical vendors
  • Measure of value for the VMI is quantitative and qualitative
  • Metrics are used to make and influence decisions/strategy

Step 4.3 – Review and update

Tap into the collective wisdom and experience of your team members

The vendor management lifecycle is continuous and more chaotic than linear, but the chaos mostly stays within the boundaries of the “plan, build, run, and review” framework outlined in this blueprint and the blueprint Jump Start Your Vendor Management Initiative. Two of the goals of managing the lifecycle are: 1) to adapt to a changing world; and 2) to improve the VMI and its impact over time. To do this, keep following the guidance in this phase, but don’t forget about the direction provided in phase 4 of the blueprint Jump Start Your Vendor Management Initiative:

  • Review and assess compliance.
  • Compile and leverage lessons learned.
  • Focus on maintaining alignment internally.
  • Identify and incorporate leading practices.
  • Update governances.

Info-Tech Insight

Continue reviewing and updating the VMI’s risk footprint. Add risk categories and scope as needed (measurement, monitoring, and reporting). Review Info-Tech’s vendor management-based series of risk blueprints for further information (Identify and Manage Reputational Risk Impacts on Your Organization and others).

Summary of Accomplishment

Problem Solved

It is easy for business owners to lose sight of things. There is a saying among entrepreneurs about remembering to work on the business rather than working exclusively in the business. For many entrepreneurs, it is easy to get lost in the day-to-day grind and to forget to look at the bigger picture. A VMI is like a business in that regard – it is easy to focus on the transactional work and lose sight of maturing or evolving the VMI. Don’t let this happen!

Leverage the tools and templates from this blueprint and adapt them to your environment as needed. Unlike the blueprint Jump Start Your Vendor Management Initiative, some of the concepts presented here may take more time, resources, and evolution before you are ready to deploy them. Continue using the three-year roadmap and 90-day plans from the Jump Start Your Vendor Management Initiative blueprint, and add components from this blueprint when the time is right. The two blueprints are designed to work in concert as you move forward on your VMI journey.

Lastly, focus on getting a little better each day, week, month, or year: better processes, better policies and procedures, better relationships with vendors, better relationships with internal clients, better planning, better anticipation, better research, better skills, competencies, and knowledge for team members, better communication, better value, and better impact. A little “better” goes a long way, and over time it becomes a lot better.

If you would like additional support, have our analysts guide you through other phases as part of an Info-Tech workshop.

Contact your account representative for more information.

workshops@infotech.com

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Calculating the impact or value of a vendor management office (VMO) can be difficult without the right framework and tools. Let Info-Tech’s tools and templates help you account for the contributions made by your VMO.

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Understanding your vendor team’s background, experience, and strategic approach to your account is key to the management of the relationship, the success of the vendor agreement, and, depending on the vendor, the success of your business.

Identify and Manage Financial Risk Impacts on Your Organization

Vendors’ failure to perform, including security and compliance violations, can have significant financial consequences. Good vendor management practices help organizations understand the costs of those actions.

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Get the help you need in this 4-phase advisory process. You'll receive 11 touchpoints with our researchers, all included in your membership.

Guided Implementation #1 - Plan
  • Call #1 - Review status of existing plan materials.
  • Call #2 - Conduct a new maturity assessment.

Guided Implementation #2 - Build
  • Call #1 - Review optional classification models.
  • Call #2 - Determine customer positioning for top vendors.
  • Call #3 - Configure vendor Scorecards and vendor feedback forms.
  • Call #4 - Discuss PIPs, RIPs, and vendor-at-a-glance reports.

Guided Implementation #3 - Run
  • Call #1 - VMI personnel competency evaluation tool.
  • Call #2 - Create internal feedback tool and discuss ROI.
  • Call #3 - Identify vendor recognition program attributes and assess the relationship landscape.
  • Call #4 - Gather market intelligence and create brand awareness.

Guided Implementation #4 - Review
  • Call #1 - Identify potential vendor alliances, review the components of a strategic VMI, and discuss the continuous improvement loop.

Author

Phil Bode

Contributors

This blueprint is a compilation/amalgamation of lessons learned from workshops and guided implementations; contributors include several members who wish to remain anonymous.

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