The Benefits of Vendor Management
Often contracts are executed then put in a bottom drawer. Vendors should be held accountable for the services they are being paid for.
Increase Cost Control
Prices can often creep up over time if they are not effectively reviewed and controlled. This is especially so in the fleet leases where several pricing elements can be adjusted by the fleet management company.
The vendor management process creates an open and transparent dialogue encouraging innovation and commitment from both parties. The engagement process can help shape the service delivery to the benefit of the customer. In the longer term the customer can understand in more detail what they really need from a supplier which will help when contracts are due for renewal.
Reduces the risk of non-delivery of services through holding the vendor to account on their performance. Issues get addressed in a timely manner and are not ignored by the supplier or the customer.
Vendor Management Challenges
Skills and Expertise
Fleet can be a complex area to understand and specialist skills are required to manage the contract correctly. Often the Vendor will pull the wool over your eyes unless they know the fleet category well.
Managing vendors can be a time-consuming activity especially where there isn’t a dedicated team in place. Vendor management may be part of a role where there are other activities which could be viewed as a priority.
Systems and Processes
For many organisations, information can be spread throughout the business and not held in a central location.
Set the Strategy
Establish SMART objectives with a broad group of stakeholders who have an interest in the fleet. This way all of the organisation can be assured they have had input into the process and their needs will be addressed. It also makes sure that the correct metrics will be measured rather than what the supplier would like to report.
Assign Roles and Responsibilities
This should include Vendor and customer side so everyone involved in the process knows what they are signing up to. Representation should be sought across regions or divisions to make sure all the needs of the business are covered. Roles should be tiered according to a RACI matrix so stakeholders are only engaged where they need to be.
Gather relevant information from across the supply chain both internally and from the Vendor. Sources will come from a variety of sources and may involve data in different formats and across differing time horizons. Data should be normalized and linked together where it is appropriate and will add value to any analysis you are likely to conduct. The end data set should provide segmentation and clarity at a granular level for each of the stakeholders involved. Analysis should be available in a timely manner so any time bound decisions can be made effectively.
Criteria may vary according to service being provided and should be linked to the overall strategy. Areas such as driver satisfaction will form part of this as well as business related commercial indicators such as cost, quality and delivery. Risks should be jointly assessed over the contractual term and joint plans established to address issues at different thresholds.
Agree and Implement
Formalise vendor management process so both the Vendor and Customer commit to managing the process together. The process should always strike the balance using empirical data and human qualitative input.