Steps to Creating a Vendor Management Process
Many managers are recognizing the need for a comprehensive vendor management process to improve efficiency along with other goals to increase the bottom line. Here, we'll go through a step by step process that will help inform your vendor management process.
1. Evaluate your current process for managing vendor information
Change management process involves recognizing that improvements can be made to make processes more efficient. Once recognized, managers can move ahead to the next step, which is to fully audit or evaluate how the current vendor management process works. Identify strengths and bottlenecks or shortcomings in the process. Assess:
- The company's current maintenance life-cycle.
- Types of maintenance tasks, priority levels of each, and which vendors are currently contracted to handle each.
- Efficiency of the company's due diligence process for evaluating existing and new vendors.
- Existing policies or codes that vendors must abide by.
- The amount of time staff spends in managing vendor information.
- Method by which vendor information is tracked.
- The current request for services processes to select new vendor(s).
- Vendor's ability to remain in compliance with governmental regulations.
- The number of individual(s) responsible for handling vendor management currently.
2. Assign responsibilities within your organization
With any change in process, you want to ensure that accountability is maintained. Assign one or more individuals specific responsibilities and outline expectations.
3. Organize existing vendors into specific categories
Depending upon the needs of your community(ies), you may have a few select vendors or you may have many in the tens or hundreds. Organize them into categories that are most critical in your operations: type of maintenance, level of criticality, geographic location, and most preferred.
4. Draft compliance/due diligence process
There are many consequences of an improper/inefficient compliance policy, such as legal risks to your company, damage in reputation, and not to mention, injury to residents, staff, or contractors. Don't let your company make monumental mistakes. Craft a policy (make sure it's organized and documented) for vendor compliance, how a company will perform its due diligence, and how the policy will be communicated to existing and potential vendors. What are the minimum requirements a vendor must have to be compliant with your policies, especially related to certificates of insurance and insurance coverage? The policy will inform expectations set by your company, that are either negotiable by a reasonable limit or nonnegotiable. In the near future, it will help to save time in evaluating vendors.
5. Invest in software to track and manage vendor information
Software is undoubtedly a large investment for your company in terms of what it costs your company, learning curve involved, financial savings, and time savings. Know your organization's current scenario and needs to identify a software that is the best fit. Conduct your own due diligence of the software applications you research. Vendor management software features to search for include:
- An editable and easily manageable vendor profile record.
- Ability to assign vendors to service requests on both a common area and owner unit-level.
- Track insurance certificates and expiration dates.
- Track vendor costs.
- Easy ability to link vendors to communities/properties.
- A way to track vendors across multiple communities, reducing duplication of information.
- Communication methods to vendors to notify them or service jobs to be completed, especially a method to update vendors across multiple communities at once.
6. Monitor, analyze, and revise
Once you've started implementing your new vendor management process, start monitoring it. Compare your assessment after the implementation to before (in Step 1). Are you noticing any improvements to your key performance indicators, such as decrease in cost, reduced time in managing vendor information, faster vendor response times, more favorable vendor ratings on the list, less amount of calls from residents trying to follow-up, etc? Take stock of the successes and shortcomings in the process and review an action plan with your team to reduce bottlenecks.