How can you build a vendor portfolio that meets your needs?

1 Assess your current situation

Before you start looking for new vendors or evaluating existing ones, you need to have a clear understanding of your current situation. This includes identifying your business goals, requirements, expectations, and challenges. You also need to analyze your spending, usage, and satisfaction levels with your current vendors. This will help you determine your gaps, priorities, and opportunities for improvement.

2 Define your criteria and categories

Once you have a clear picture of your current situation, you need to define your criteria and categories for selecting and managing vendors. Criteria are the standards and measures that you use to evaluate and compare vendors based on their capabilities, performance, and fit with your needs. Categories are the groups or segments that you use to classify vendors based on their importance, value, and risk to your business. For example, you can use a four-quadrant model to categorize vendors as strategic, critical, routine, or niche.

3 Conduct market research and sourcing

The next step is to conduct market research and sourcing to find potential vendors that match your criteria and categories. Market research involves gathering and analyzing information about the vendor landscape, such as industry trends, best practices, benchmarks, and competitors. Sourcing involves identifying and contacting potential vendors, requesting proposals, and conducting due diligence. You can use various methods and tools to conduct market research and sourcing, such as online databases, trade shows, referrals, or platforms.

4 Negotiate and finalize contracts

After you have shortlisted and selected the best vendors for your needs, you need to negotiate and finalize contracts with them. Contracts are the legal documents that define the terms and conditions of the vendor relationship, such as scope, deliverables, pricing, payment, quality, service level agreements, warranties, liabilities, and termination. You need to ensure that your contracts are clear, fair, and aligned with your goals and expectations. You also need to review and update your contracts periodically to reflect any changes or issues.

5 Monitor and evaluate performance

Once you have established contracts with your vendors, you need to monitor and evaluate their performance regularly. This involves tracking and measuring their performance against the criteria and service level agreements that you agreed upon. You also need to provide feedback, recognition, and support to your vendors to help them improve and maintain their performance. You can use various tools and techniques to monitor and evaluate performance, such as dashboards, reports, surveys, audits, or reviews.

6 Manage relationships and risks

The final step is to manage relationships and risks with your vendors. Relationships are the interactions and communication that you have with your vendors to build trust, rapport, and collaboration. Risks are the potential threats or uncertainties that can affect the vendor relationship or performance, such as delays, errors, disputes, or breaches. You need to manage relationships and risks proactively and strategically to prevent or resolve problems, leverage opportunities, and optimize outcomes. You can use various methods and tools to manage relationships and risks, such as meetings, calls, emails, contracts, contingency plans, or escalation procedures.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?