Vendor Management: Does Your Business Need It?

Vendor Management: Does Your Business Need It?

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Businesses, even small or new ones, have plenty of moving parts. And usually, the bigger and more successful a company gets, the more people it needs to keep moving. Sometimes, though, there are instances when hiring full-time employees is not feasible. So, many companies turn to third-party providers or vendors. And the more tasks you must delegate, the more crucial vendor management becomes to your success.

What Are the Benefits of Vendor Management?

You might think this counterintuitive—after all, you’re delegating tasks to keep yourself from having to think about them. Actively managing outsourced vendors seems like a waste of time.

But that is far from the truth! Being intentional about managing your outsourced workers reduces risk, increases your efficiency, reduces costs, and accelerates service delivery.

Vendor Management is Strategic

You could see the importance of vendor management by considering what happens when you disregard it. For instance, hiring an excessive amount of vendors decreases your purchasing power.

For small businesses, the savings from outsourcing to a few key personnel (as opposed to a whole range of contractors) could make a significant difference.

It Prevents Reputational Damage

A business also risks damaging its name if it gets the wrong contractors—especially if these hires are for client-facing roles like customer service. Besides reputation, you could also risk non-compliance with local or federal laws, especially when outsourcing specialized positions like bookkeeping or accounting.

It Makes for Organized Operations

Finally, hiring the right person makes it easy to deliver services. Technological failures, incapacity to provide remedies, failure to meet obligations, and human error are all realities that businesses face at one point or another. When you have a vendor compatible with your team, you reduce the likelihood of these oversights.

Best Practices for Effective Vendor Management

Outsourcing contractors is smart, especially for companies just starting or establishing themselves. These companies delegate services that are not their specialization or ones they aren’t comfortable with, so they can focus on what they do best. It’s a technique proven to make teams more productive.

When businesses grow, they usually develop new products or services, which means new capabilities and roles to fill. Usually, the first thing they do is bring in new vendors. Pretty soon, they would have outsourced a good chunk of their operations and are spending as much time and money as they would if they’d taken full-time employees. The good news is that you can avoid this scenario. Read on to learn how!

Vendor Consolidation: Your Key to Growth

Instead of spreading your time and money across several vendors, you could reduce the number of contractors you partner with to make you more cost-effective. You’d also be able to manage them more efficiently. Here are the things you should remember when consolidating your vendors for better management.

Establish a Clear Vendor Management Framework

A vendor management policy is your first step toward preventing third-party data leaks and operational mishaps. Before creating a policy, you’d need to list all your vendors. That would include all associates, third parties, and service providers with whom you work.

Then, once you’ve compiled this list, identify vendors that fit any of the following criteria:

  1. works with confidential, proprietary, or sensitive information
  2. is authorized to access your internal network
  3. delivers crucial business activities (e.g., outsourced sales development representatives working in sales teams)

It would help if you spent most of your time learning about managing vendors that fit these criteria, monitoring them, and providing remediation as often as necessary. If not, it could lead to inefficiencies or data breaches.

What to Include in a Vendor Management Framework

A vendor management policy must detail how you navigate your business associations with your hired third-party providers. Your contracts must carefully delineate vendor roles, service level agreements (SLAs), and documents that outline compliance standards and adequate controls the company will enforce in its vendor relationships.

The policy should also include vendor reviews (e.g., site visits, auditing requirements), liability in the event of service delivery failure, the point at which management gets oversight, disaster recovery, and criteria for contract termination.

Use KPIs to Monitor Vendor Performance

Once you have your vendor management policy in place, you can ensure that your contractors provide services that meet your expectations. Having key performance indicators (KPIs) will let you monitor how they’re doing in their role and quantify how they’re working towards your goals.

Having a streamlined vendor roster means you don’t have to monitor dozens of freelancers’ performance. Even better, if you have a managed service provider, your provider would train, monitor, and evaluate your contractors.

Manage the Risks of Outsourcing

Whether you work with selected third-party vendors or hire a managed service provider to offload tasks on your behalf, you’d still have to manage the risks associated with outsourcing. Managing risk starts with effective vendor selection. Before finalizing a contract, businesses must do due diligence and proper planning.

Once the right vendors are in place, you can leverage technology to streamline your process for managing vendor risk. Technology allows you to create a “single source of truth” on vendors. It integrates vendor information into one repository, centralizing your contracts, SLAs, and non-compliance penalties.

Vendor Training, Evaluation, and Reporting

Risk management also involves proper vendor training and evaluation. Surveys, assessments, and correct KPIs create a structured approach to reviews, simplify training, and ensure that you and your vendors are on the same page regarding compliance. Of course, when you hire contractors through a managed provider, you don’t have to worry about all of these.

Managed contractors handle training and evaluation of their contractors. For Wing, in particular, assistants have access to a library of training courses and programs for various online tools and platforms, ensuring they can constantly upskill as their job requires. Finally, businesses need reporting tools to track their vendors’ performance.

Leverage Wing Assistant Today

Hiring a contractor is an efficient way to scale up your operations in a short amount of time. But sometimes, outsourcing to vendors becomes a liability when trying to scale too fast. Preventing this from happening involves being intentional about your hires, creating a vendor management framework, and reviewing their performance using KPIs.

Wing Assistant takes the hassle away from building and managing an outsourced team. We have vetted and trained assistants with experience in various specializations, including bookkeeping, marketing, sales, real estate, e-commerce, and more. Book a call to learn how you can own your time today!

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