5 steps to Align Vendors
Controlling costs is an excellent way to maximize the profitability. However, squeezing your employees and resources beyond limits may lead to opposite results. Nonetheless, controlling costs through vendor alignment is highly effective. An organization may follow 5-step process to streamline its vendor alignment:
- Gather Requirements
Assessment of all the products and services to be procured from outside the organization is the foremost thing towards vendor alignment. Organizations which identify services/products for vendor alignment at different time periods usually incur additional costs in terms of manpower hours and resources allocation as the same process is repeated.
- Review existing contracts
Review the existing contracts in terms of pricing, quality and payment terms. Ascertaining existing contracts helps is realistic expectation setting while aligning new vendors. It also helps in identifying the critical parameters for different products or services which may form the deciding factors in aligning new vendors.
- Create Vendor Selection Criteria
Create a dashboard with scorecard system to rate all the potential vendors on basis on cost, quality, turnaround time, payment structure and other relevant factors to your business. The scoring may be done as per the relevance of each of these points to your business.
- Conduct extensive research
Conduct an exhaustive research to identify and list all possible vendors for various products/services. Request for quotations from a minimum 5 vendors to compare and get a fair comparison.
- Contract
Collect feedback of all the shortlisted vendors from different sources. Gather feedback on timeline adherence, product/service quality level and consistency. Negotiate on price, quality/quantity and payment terms with the vendors. This is one of the critical ways to control your organization’s cash flow. Sign an initial contract for a minimum time period to test the quality of products/services and other factors like timeline adherence and consistency and then further renew the contract.
