1. Is Vendor Collaboration Simpler Than It Sounds?
Vendor performance management is a process where you, as a procurement professional,
advise your vendors of how well they are performing and what they can do better. This
frequently leads to better vendor performance and lower costs for your organization.
That's great, obviously. But, too often, it assumes that the learning and improvement is
one-sided: only the vendor is evaluated and only the vendor improves.
This one-sided approach leaves something to be desired because there may be cost saving
improvements that your organization can make but doesn't because you have no process
for soliciting vendors' ideas on how your organization can improve. Vendors can often
provide a wealth of knowledge because they are in a unique position to observe what
people like you and organizations like yours do to be best-in-class. And vendors' advice is
free!
So, the one-sided vendor performance management of yesterday has to evolve into the
two-way vendor collaboration of tomorrow. And it doesn't have to be difficult. Getting the
flow of great vendor ideas started can begin with just asking a few questions, then sitting
back and listening intently.
Imagine the profit-boosting ideas you could discover just by asking these four simple, yet
essential, questions of each of your strategic vendors:
1. What can we do to be a better customer?
2. What requirements of ours force you to jack up your price?
3. What do other customers of yours do well that we don't do well or don't do at all?
4. How can we collaborate to take cost out of the supply chain so that both of our
organizations can be more profitable?
The answers to these questions may unlock some untapped opportunities for boosting your
organization's bottom line.
And, because the business environment constantly changes, you can use these types of
questions year after year to drive continuous improvement.