Communication is Key in Successful Vendor Management Programs
By Craig Carrow, Vice President, Fiserv, Inc.
Your contact center’s performance hinges on your ability to build strong, mutually-beneficial relationships with a variety of technology vendors. This is no simple task, but the results are worth the effort. A well-executed vendor management program can significantly reduce costs, improve customer support and service, increase staff productivity and boost employee satisfaction. In other words, everybody wins.
By using the following best practices, you can create a successful vendor management program that will help you achieve these goals. Ignoring them, on the other hand, can lead to poor provider relationships that can negatively impact your business and reduce the quality of your customer interactions.
1. Set Clear Expectations
A good vendor management program begins with setting clear expectations, in writing. Work with your vendors to define the service being provided and determine how success will be measured. Set reasonable timeframes for program delivery, based on averages from past experience. In this way, both you and the vendor have a solid foundation on which to set goals and improve performance and service over time.
Clearly communicating your expectations is essential. Set up meetings with all appropriate personnel, in person if possible, to discuss how the vendor can contribute to your success. Service Level Agreements should measure performance against defined standards, and the provider should include well-defined plans for issue escalation. From the beginning, keep in mind that your goal is to establish a high level of trust.
2. Monitor Performance, Measure Results
Once a relationship with a vendor has been established and realistic performance targets have been set, you need an objective way to measure and track performance. Never assume that everything will go according to plan without follow-up by your managers. Especially in the beginning of the relationship, a vendor’s performance should be measured on a regular basis.
Vendor objectives should include your critical business requirements. For example, response times and project completion may be objectively measured and documented. Some type of scoring system is also recommended so that you can rank vendors and measure their improvement. Each vendor needs to understand your methodology and know how they can work with you to solve any performance problems that are identified.
Do not take a one-way approach when communicating performance results with your vendors. Solicit feedback on their scores and listen to their concerns. Help them understand that you want them to succeed, and work to understand their business issues so that you can work together to solve problems and improve performance in the future.
3. Communicate in a Proactive Manner
Many vendor management programs fail to live up to their potential due to a lack of frequent, effective communication and feedback. Weekly meetings (in person or by phone) will ensure a relationship of mutual trust that includes both negative and positive feedback.
Frequent communication also helps identify problems in a proactive, rather than reactive, manner. With constant contact, vendors will not only perform better, they will let you know about potential issues that may affect their performance. For example, let’s say that you call a certain vendor every Friday morning at the same time just to touch base and see how things are going. Because your contact expects that call, he or she will prepare for it by thinking of any issues that have recently come up. In addition, if you bring up a performance problem during the call, it is less threatening to the vendor than if you had placed a separate call just to discuss the problem. In a less threatening environment, solutions can be more readily identified and corrected.
4. Let Vendors Know Your Plans and Priorities
Another important factor in a successful vendor management program is the sharing of information about your business plans and priorities. This includes giving vendors information about major changes and plans, and transferring knowledge that will help the vendor understand your business and improve their service to you.
5. Invite Key Vendors to the Table
Certain vendors may supply a service or product that makes them critical to your overall mission. Invite these vendors to relevant strategy meetings. Keep in mind that they are experts at a particular aspect of your business, and they are probably a great source of information or research that might help you gain a competitive lead. Perhaps they are planning a product enhancement that will impact your customers or your service, or perhaps they can use your customers’ feedback to improve their products. In any event, a collaborative partnership with key vendors makes good business sense.
6. Seek Value First
Remember the old adage, “you get what you pay for” when dealing with vendors. If you are constantly asking vendors to reduce their prices, one of three things will happen. Vendors will cut back on their services, walk away from your business, or go bankrupt. Good vendor management is focused on optimizing value, even when cost management is a top priority.
7. Reward Success
The real value of measuring vendor performance is that it allows you to rank vendor performance so that you can reward top performers and motivate the rest. Monthly and quarterly performance reviews let vendors see how they are performing in comparison to their peers and what they can improve on. An annual awards ceremony for top vendors can become both a motivator and a ‘perk’ that differentiates you and attracts future vendors.
8. Strive for Long-Term Relationships
The best service and prices typically come from long-term vendor relationships. Changing vendors year after year in an effort to reduce costs usually has a negative impact on quality and performance.
The Bottom Line
An effective vendor management program allows you to build alliances with service providers and suppliers that will help your business meet its goals and help your vendors make a profit as well. Win-win relationships is the fundamental goal and the foundation of any successful program. Within just 24 months of implementing its vendor management program, Fiserv realized a 22 percent increase in vendor performance and our vendor relationships had improved. This, in turn, has allowed us to improve the service and quality we provide to our own clients.
Craig Carrow, a vice president with Fiserv, has 23 years experience in vendor management. Craig can be reached at craig.carrow@fiserv.comor 716 564 4015.