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6 Tips for Managing Vendor Relationships

By 4th July 2017June 22nd, 2022Uncategorised

Managing Vendor Relationships is often focused on finding suppliers with the cheapest price for a product or service, however, it’s about much more than just that.  Vendor management is about ensuring that the agreement between the company and the supplier is mutually beneficial for both parties.

By ensuring that you manage vendors effectively, you ensure proper service delivery at the required rate and satisfaction to help achieve your business goals.


Before signing an agreement with a vendor, be sure to consider the following:

  1. What is the problem statement?
    A vendor relationship starts long before the signing of the SLA.  To ensure that you make the right decision when appointing a vendor, you need to understand the gaps within your business that the vendor will be able to assist with or fill.
    Clearly define performance measures for the vendors as this will allow you to evaluate the best vendor(s) to meet the stated requirements.  This in turn will create a clear picture of the expectations  the vendor(s) must meet.
  1. Meet the team
    Ensure that you meet with the whole team you will be interacting with when the contract is signed, instead of just the sales person trying to get the deal signed.
    Evaluating the culture fit between your business and the possible vendor, is key to a successful vendor relationship.  In meeting with the rest of the team, you get to know the workforce, organisational structure and overall values.


Now that you have selected the vendor you will need to manage the relationship.

Keep the following in mind if you’d like to manage your relationship with the vendor successfully:

  1. Meet regularly and align priorities
    Where do relationships in general go wrong?  When the two parties don’t work together toward a common goal.  The SLA will include various items to be attended to, so it becomes important to align priorities and ensure that the vendor attends to critical items first.  This will also ensure that you align their priorities to that of the business.
    The best way to facilitate this is to meet regularly and share information that will assist the vendor in delivering on the required services / products.
  1. Think long term
    Changing vendors on a regular basis might seem like a good idea, especially if there are cost savings involved, however, this might affect the quality of service.  Every time a new vendor is appointed, there is a “teething phase” before the service delivery is at the required standard.  One of the major benefits of building long term relationships lies in the institutional knowledge and experiences gained.  This allows for an in-depth understanding of processes that might take a new vendor some time to familiarise themselves with.
  1. Fair negotiations
    A cheaper price does not always guarantee the same quality.  Facilitate negotiations in such a way that a win-win agreement for both parties is achieved.  You should be willing to pay more in order to receive better quality.  Vendors can reduce their pricing, but when it reaches a point where it is no longer viable to continue with the relationship, either the quality of service decreases or the vendor walks away from the deal.
  1. Put contingencies in place – obstacles are inevitable
    Plan for everyday contingencies (such as late deliveries) as well as major obstacles that might affect business operations.  Discuss possible ways in which these situations can be dealt with from both parties’ perspectives, to ensure quick turnaround time in resolving the issues at hand, should they come up.  Document these items as well for future reference.
  1. Pay on time
    Consider how annoying it can be when your customers don’t pay you on time.  Paying your vendors on time shows that you respect their business and value the relationship and the work they do.
  1. Drink each other’s tea
    Relationships are a two-way street.  Both the business and the vendor are responsible for working towards a successful relationship.  Accept accountability for your role in the process to ensure a successful outcome, this includes feedback on items requested by the vendor and following the processes set out by the vendor to deliver on the promised services / products.
    Another aspect to this point is to understand the vendor’s business too.  What might seem like a simple process to you is actually a key aspect of the vendor’s overall business to deliver on quality. 

Whether you are a small, medium or big corporate company, you will always have vendors supplying a product or service to your company. Building good relationships with the vendors you’d like to build strategic partnership with, will go a long way in securing a trusting partnership.

Learn more on how to build a Successful Relationship with your Customers and Clients.Contact Us

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