How to Manage Vendors Effectively

Working with suppliers, contractors, and other external vendors is an important part of many business, IT, and healthcare jobs. Knowing how to manage vendors effectively can help you demonstrate your value to your organization—and help you advance your career.

Strong vendor relationships help your organization fulfill its core mission, and they can give your employer a leg up on the competition while helping you catch your supervisor’s eye. On the flip side, a poor vendor relationship might result in shoddy service or materials that could hit your organization—or your career—with a costly setback.

Further reading: Establish your online brand.

The key to developing a healthy relationship with vendors is the same as cultivating a personal relationship: building a solid foundation of trust and respect. Here are five tips on how to manage vendors effectively and create win-win situations for everyone involved.

1. Choose the right partners.

A relationship can only succeed if both parties share the same values, the same quality standards, and the same commitment to making the partnership work. Before entering into an agreement, carefully evaluate potential suppliers and contractors to ensure that their work meets your expectations. Solicit testimonials from previous customers to determine whether the vendor’s values align with your organization’s and whether the vendor can deliver what it promises.

One of your goals when choosing a vendor should be to minimize the risk to your organization. Make sure that potential vendors are committed to physical safety, data privacy, and information security and that they abide by practices that will shield your organization from risk. Consider the following: What insurance policies does the vendor carry? If it’ll be doing any physical labor on your company’s property, what kind of safety training and equipment do its employees receive? How will it ensure the integrity of your firm’s electronic information?

2. Look to the long term.

Long-term partnerships hold more advantages than one-time transactions. Once you’ve found a contractor or supplier you’re comfortable with, you don’t have to go through the costly vetting process every time you need similar goods or services, saving your organization time and money. Plus, you’re likely to receive better follow-up service if the supplier knows that it can count on you for additional business.

Long-term partnerships can’t be one-way streets—both parties must find value. Try to understand a vendor’s business needs and how you can help, and it’ll likely do the same. When drafting contracts, don’t just impose penalties if a vendor fails to deliver—offer rewards for exceptional service. Treat your vendors as you’d want to be treated—and pay them on time.

3. Set clear (and realistic) expectations.

Establish clear expectations up front. Set the scope of the work to be performed, the time frame in which it should occur, the standard of quality and how it’ll be measured, how the parties will communicate, how decisions will be made, and what to do in the event of contingencies.

Put this information in writing so there are no ambiguities or misunderstandings. Make sure that any deadlines and deliverables are reasonable, and actively seek your vendor’s input to ensure that they are.

4. Communicate constantly.

Projects often last for weeks or months. Setting up a schedule for regular updates ensures that both parties remain in the loop about ongoing developments. If anything changes—budgets, organizational priorities, whatever—inform your vendors right away. Communicating early and often makes it easier for both parties to quickly adjust to evolving circumstances and work together to find solutions when problems arise.

5. Measure performance.

You and your vendors bear responsibility for the success or failure of the partnership, so make sure that everyone is accountable for their roles. Hold vendors accountable to established evaluation metrics. Similarly, ask vendors for their feedback and insight into the health of the relationship.

Managing vendors effectively is an ongoing process that requires balancing your organization’s needs with those of your partners. When those needs are in sync, the relationship stands a good chance of succeeding. When they don’t, despite your best efforts to align them, it might be time to look for a new partner.