Careers Business Ownership 8 Tips for Vendor Management Success Share PINTEREST Email Print Business Ownership Operations & Success Operations & Technology Sustainable Businesses Supply Chain Management Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By James Bucki James Bucki James Bucki has nearly two decades of experience in consulting, manufacturing, publishing, healthcare, banking, and education. He is also the director of computing technology at Genesee Community College. Learn about our Editorial Process Updated on 11/20/19 Vendor management allows you to build a relationship with your suppliers and service providers that will strengthen both businesses. Vendor management is not negotiating the lowest price possible but constantly working with your vendors to come to agreements that will mutually benefit both companies. 01 of 08 Share Information and Priorities The key to succeeding in vendor management is to share information and priorities with your vendors. That does not mean that you throw open the accounting books and give them user IDs and passwords to your systems. Appropriate vendor management practices provide only the necessary information at the right time to allow a vendor to serve your needs better. It may include limited forecast information, new product launches, changes in design and expansion or relocation changes. 02 of 08 Balance Commitment and Competition One of the goals of vendor management is to gain the commitment of your vendors to assist and support the operations of your business. On the other hand, the vendor is expecting a certain level of commitment from you. It does not mean that you should blindly accept the prices they provide. Always get competitive bids. 03 of 08 Allow Key Vendors to Help You Strategize If a vendor supplies a key part or service to your operation, invite that vendor to strategic meetings that involve the product they work with. Remember, you brought in the vendor because they could make the product or service better and/or cheaper than you could. They are the experts in that area, and you can tap into that expertise to gain a competitive edge. 04 of 08 Build Partnerships for the Long Term Vendor management prioritizes long-term relationships over short-term gains and marginal cost savings. Constantly changing vendors to save a penny here or there will cost more money in the long run and will impact quality. Other benefits of a long-term relationship include trust, preferential treatment and access to insider or expert knowledge. 05 of 08 Seek to Understand Your Vendor's Business Too Remember, your vendor is in business to make money too. If you are constantly leaning on them to cut costs, quality will suffer, or they will go out of business. Part of vendor management is to contribute knowledge or resources that may help the vendor better serve you. Asking questions of your vendors will help you understand their side of the business and build a better relationship between the two of you. 06 of 08 Negotiate to a Win-Win Agreement Good vendor management dictates that negotiations are completed in good faith. Look for negotiation points that can help both sides accomplish their goals. A strong-arm negotiation tactic will only work for so long before one party walks away from the deal. 07 of 08 Come Together on Value Vendor management is more than getting the lowest price. Most often the lowest price also brings the lowest quality. Vendor management will focus quality for the money that is paid. In other words: value! You should be willing to pay more to receive better quality. If the vendor is serious about the quality they deliver, they won't have a problem specifying the quality details in the contract. 08 of 08 Vendor Management Best Practices Whether you're a multimillion dollar company or a small business with a few employees, here are some vendor management best practices that any size business can use.