Vendor Management - 550 Words

Vendor Management (Essay Sample) Content: Best Practices in Vendor Management Studentà ¢Ã¢â€š ¬Ã¢â€ž ¢s Name Institutional Affiliation Best Practices in Vendor Management Vendor management has become an important part of organizations today particularly those engaged with information technology (IT). According to Cullmann Goldstein (2003), outsourcing a function of a business to a third party organization can be a cost-effective move and can also offer a value-added alternative to the firm. It is thus essential for an organization to build and maintain good relationships with its vendors. Once a contract has been signed between the company and the vendor, managing of the relationship between the two begins. Inevitable challenges such as process differences, culture differences, and language difference can hinder the transition process. However, with effective vendor management, these challenges can be reduced and objectives of both parties achieved. Best practices in vendor management include constant communication, the definition of roles and responsibilities, flexibility, and performance measurement (TBI Central, n.d). Effective communication is an integral part of many business processes. Constant communication, therefore, plays a significant role in building and maintaining a good working relationship between a company and vendor. Vendor-organization relationship is critical to the success of the project. It is the role of the organization to establish communication between both sides in order to maintain the compliance of the vendor to the contract. The level of the service provided by the vendor, in this case, determines the regularity of communications. In this regard, communication can vary from most interpersonal to less interpersonal. TBI Central informs that regular meetings where end users can provide their input help in sharing information between the company and the vendor. Another best practice in vendor management is responsibilities and roles definition. According to TBI Central (n.d), the roles between the company and the vendors have to be defined clearly to avoid potential conflicts during the course of the project. The expectations of the relationships have to be clarified and documented to avoid disputes. If the roles and responsibilities are not defined clearly, the work can be overlooked, duplicated, or done inefficiently. Therefore, to avoid misunderstandings and to accomplish the anticipated value of the relationship, the responsibilities and roles of both parties have to be defined clearly. Flexibility is also a significant factor that a company needs to consider when entering into partnerships with vendors. An organization has to be wary of exclusive or restrictive relationships, for example, a limitation with future customers or other vendors. A short term contract with an option to renew, therefore, is better in the incidence the vendor asks for a long-term one. In addition, the company should also show good fait...