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[Guest Post] How To Overcome Common Vendor Management Issues

Vendor Management Issues

American consumers have become accustomed to the convenience of modern-day shopping. Many of us take it for granted that whatever we need or want will be on the shelf ready for us to put in our carts. But in reality, there is an extremely complex network of third-party suppliers working behind the curtain to make everything look as simple as it is. Retailers know this all too well.

No matter how organised or well-managed a retail outlet is, its success depends in large part on maintaining effective relationships with all of those vendors. Whether these partners supply the actual physical goods on the shelves, handle specific tasks within the supply chain or provide a critical knowledge base, there’s no denying how important they are to a retailer’s business.

Unfortunately, this also means that any problems your operation may encounter with your vendors could be a potential catastrophe in the making. Communication breakdowns, mismanagement and inefficiency at any point in the process can lead to serious issues and cut into your effectiveness. Even if you’re firing on all cylinders, any problems between you and suppliers can throw a monkey wrench into the works. This is why vendor management is such a crucial component of your entire operation.

Like any type of relationship, you can’t simply expect your partner to do everything exactly the way you want it and contribute nothing in return. Making the partnership between you and your third-party vendors into something that truly works for everyone requires an honest effort from all involved. You need to put in the work to make it clear what their expectations are and how you will help them get into a position to succeed.

This is easier said than done, of course, because all relationships typically come with unique challenges and obstacles that must be overcome with teamwork and cooperation. Fortunately, a strong vendor management process can help you make the most of your network and prevent sticking points from becoming too sticky. Read on to learn more about how to establish a successful framework for managing your vendors and why it’s essential for your success.

Stronger Vendor Management Process

Building a stronger vendor management process

Having a strong foundation is necessary for getting off on the right foot with your suppliers. This means understanding the key elements of this process and how to incorporate them into your everyday operations. The first step is to determine what your overall goals are and prioritize them.

Knowing what you want to accomplish provides a baseline for choosing the partners who will be in the best position to take you there. This includes creating the metrics you will use to evaluate what progress looks like for you. There’s little you can do to guide your partners to achievement if you don’t know when they’ve succeeded.

After identifying and prioritising your organisation’s objectives, you will need to categorise them based on their importance. Not every need has the same level of urgency, and you should allocate your time and resources accordingly. This will prevent you from wasting your efforts on doing too much tweaking to elements that don’t have much ROI. Spending 99% of your time to gain a 1% improvement is a formula for failure.

Use these criteria to secure the vendors you need to meet your objectives. Once this is achieved, however, you can’t just leave the interactions with them on autopilot. Keeping up with them on a regular basis is key to ensuring the best results. This also means looking at your relationships and evaluating how well they’re serving you.

When all of these elements are functioning together and matching you with the most effective partners, your enterprise will enjoy numerous benefits.

Effective Vendor Management

What effective vendor management can do for you

Doing everything you need to do to become more effective at dealing with providers can make your job a lot easier. That’s because it brings you a number of advantages over the long run.

For example, a more efficient process will give you more opportunities to seek vendors from a larger pool. This results in more choices and potentially the chance to receive better rates.

You also stand to get a stronger idea of which supplier relationships are working well for you and which aren’t. This enables you to prune away those that are hurting more than they are helping. Paying close attention to the experiences you have with your vendors also means you can take care of problems before they have an opportunity to become much worse. This is because you will be communicating on a more frequent basis.

Overcoming Vendor Management Challenges

Overcoming the biggest challenges

There will always be obstacles that appear in even the most effective organisations. The trick is not ignoring them, but working to anticipate them and climb over them when they appear.

One of the most valuable pieces of advice when it comes to vendor management is to keep the lines of communication open. This can work wonders for preventing serious issues because many of them stem from third-party providers who misunderstand your instructions or become frustrated with you stonewalling them. Take the time to check in with them on a regular basis to make sure everyone understands the expectations and is taking the necessary steps to meet them. Most of the time, just keeping the door open can alleviate stress and keep things flowing smoothly.

Another common cause of strife between retailers and their suppliers is documentation that doesn’t cover all of the bases. These contracts leave key terms ill-defined, which leaves the door open for miscommunication and misunderstandings. This is why it is crucial for you to have specialists create and review your documents to ensure no stone is left unturned and all of the details are ironed out ahead of time.

Excessive administrative costs can be a tremendous drag on your business, and these often are the result of poor vendor management practices. Look for inefficiencies in your workflow, data collection and reporting. Implementing a few strategic changes can make a tremendous difference in how streamlined your interactions with your suppliers can be.

Some companies report that they spend as many as 39 hours a week resolving errors or discrepancies between them and their vendors. This underscores the value of paying proper attention to the vendor management process from the start and seeing it through at every stop along the supply chain. Retailers simply can’t afford to let these essential relationships turn sour, which makes the right strategies so necessary.

For more guidance on how you can build a better connection with the partners you depend on for success, take a look at the below infographic.

Infographic - Vendor Management Issues


A strong vendor management process can guard against many common challenges that you might face. If you can establish a successful framework, you'll be well on the path to managing your vendors and establishing a good working relationship that can only be mutually beneficial.

Matt Brown

Matt is vice president of Sales for American Transport Group, a freight brokerage company in Chicago. He has more than 25 years of experience in the transportation industry — in direct sales, sales management and marketing.

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