Recently, a number of companies have endured high-profile outsourcing failures in service delivery, project execution, and realization of the expected value. These incidents have opened eyes to how business in moving into a decentralization of technology purchasing, and increased complexity in vendor pricing and licensing. Vendor management has gained prominence in the recognition that vendors need to be managed through the whole processes, not just at the end.
The VMO manages and facilitates contracts across three crucial departments on a regular basis. Each of them has different sets of skills, methods, and processes. The job is only made more complicated by the fact that the VMO has to work multiple departments and supplier relationships both in the operational and strategic levels. Whether you choose to have a very structured approach to your staffing of this positing or more laid back is of very little difference.
It is no surprise that business are looking at establishing a VMO position in there company structure. Lowering overall costs and improving supplier relationships to attain the best value are the earmarks of a goof VMO.
A VMO's effectiveness depends on the ability to follow eight guiding principles:
1. Manage VMO as a business with in a business
2. Leverage consolidated purchasing power
3. Continuously manage contractual relationships with suppliers
4. Treat suppliers as an extension of internal resources
5. Use the minimum numbers of suppliers possible
6. Select the highest valued supplier; not the lowest purchasing price
7. Negotiate win/win deals with all suppliers that balance risk, speed, and performance
8. Actively monitor, manage, and improve supplier performance
A VMO can bring tools to the business that will abundantly improve the time cycle and reduce costs. No matter how formally the position is executed, these 8 guidlines help reduce cost risk and improve vendor relationship.
The VMO manages and facilitates contracts across three crucial departments on a regular basis. Each of them has different sets of skills, methods, and processes. The job is only made more complicated by the fact that the VMO has to work multiple departments and supplier relationships both in the operational and strategic levels. Whether you choose to have a very structured approach to your staffing of this positing or more laid back is of very little difference.
It is no surprise that business are looking at establishing a VMO position in there company structure. Lowering overall costs and improving supplier relationships to attain the best value are the earmarks of a goof VMO.
A VMO's effectiveness depends on the ability to follow eight guiding principles:
1. Manage VMO as a business with in a business
2. Leverage consolidated purchasing power
3. Continuously manage contractual relationships with suppliers
4. Treat suppliers as an extension of internal resources
5. Use the minimum numbers of suppliers possible
6. Select the highest valued supplier; not the lowest purchasing price
7. Negotiate win/win deals with all suppliers that balance risk, speed, and performance
8. Actively monitor, manage, and improve supplier performance
A VMO can bring tools to the business that will abundantly improve the time cycle and reduce costs. No matter how formally the position is executed, these 8 guidlines help reduce cost risk and improve vendor relationship.
About the Author:
Joseph B. Kappernick works with companies to help them reduce their logistics and shipping costs. Please visit NPI to learn more about transportation vendor cost reduction
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