Vendor Management: Best Practices for Your Small Business
Vendor management is essential to running any small business. The best practices for management include carefully selecting your vendor and then focusing on building a strong relationship. The lack of a good working relationship with your vendors can negatively impact your business. Here are some tips on vendor selection and vendor management methods to use.
Take your time selecting a vendor.
You don’t want to get tied down to using a vendor that won’t work well with your business, so do your research and make sure you find one that pairs well with your business. To start, compose a list of several possible vendors and request price quotes, a business proposal, and any other information you’d like from each one. Evaluate each vendor’s proposal, review their requirements to see if they are in sync with your business requirements, and then begin negotiating a contract. You should get to the last step only if you have narrowed down your choices to one or two possibilities. Think about how your business and the vendor will work together for a short period of time, as well as how the long-term relationship will fare. You should know exactly what you’re paying for; don’t fall for persuasive salespeople who just want to close the deal.
Know the terms of the contract.
Certain vendors may demand an exclusive or restricted relationship, limiting your ability to work with other vendors. Make sure the contract doesn’t limit negotiations with future potential customers or other vendors. Also, if the vendor tries to talk you into a long-term contract, negotiate for a short-term contract with a renewal option, so you have the option to change providers if you’re unhappy. Make sure you stand up for what you want and need from a vendor, but avoid going overboard with demands. Show vendors you’re willing to work with them and be flexible’ this will help you earn their trust and build a good relationship with them.
Meet the vendor’s needs.
Vendors need to run their own business as well as meet the needs of yours, and if the vendor is not satisfied with the relationship, it can take its services to other customers. According to an article on MSN, you must “structure the deal in a way that ensures mutual success” and let the vendor know when it is doing a good job. You and the vendor both have to fulfill the terms of your contract and feel that you’re getting the most from the relationship. You can help each other with media and communications by doing joint promotions, as well as co-developing and selling products.
Monitor the vendor’s performance constantly.
This is particularly important in the beginning stages of the relationship right after you sign the contract. Mutual trust is important, but you shouldn’t assume that everything will go according to plan. Until the working relationship is well-established, monitor the vendor’s performance to make sure it upholds the terms of the contract. For example, you might entrust your vendor with maintaining a certain standard of service or method of ordering, keeping strict shipping times, or answering calls in a timely manner. Ensure it is performing these tasks effectively. If you find the vendor’s services don’t reflect your business’s standards of quality, you may have to reassess the situation.
The best practices for vendor management are based on building trust and a relationship with your vendor. Keep the lines of communication open and ensure that the contract benefits both parties to get the best vendor services for your small business.