How can you identify risks when working with new vendors?

1 Define your requirements

The first step to identify risks when working with new vendors is to define your requirements clearly and accurately. You need to specify what you expect from the vendor in terms of quality, scope, time, cost, and communication. You also need to establish the criteria and methods for measuring and evaluating the vendor's performance. By defining your requirements, you can avoid misunderstandings, conflicts, and delays that can jeopardize your project and business goals.

3 Conduct a risk analysis

The third step to identify risks when working with new vendors is to conduct a risk analysis based on the information you gathered from the previous steps. You need to identify the potential sources of risk, such as technical issues, contractual disputes, or market changes, and evaluate their likelihood and impact on your project and business objectives. You also need to prioritize the risks according to their severity and urgency, and plan how to avoid, reduce, transfer, or accept them. By conducting a risk analysis, you can prepare for the possible scenarios and outcomes that can affect your vendor relationship.

4 Negotiate a contract

The fourth step to identify risks when working with new vendors is to negotiate a contract that reflects your requirements, expectations, and risk management strategies. You need to ensure that the contract covers all the essential aspects of the vendor relationship, such as scope of work, deliverables, milestones, payment terms, quality standards, performance indicators, dispute resolution, and termination clauses. You also need to review the contract carefully and seek legal advice if necessary, before signing it. By negotiating a contract, you can protect your rights and interests, and establish a clear and fair agreement with the vendor.

6 Review and improve

The sixth and final step to identify risks when working with new vendors is to review and improve your vendor relationship continuously. You need to collect and analyze data and feedback on the vendor's performance, and measure how well they met your requirements and expectations. You also need to identify the strengths and weaknesses of the vendor relationship, and discuss how to improve them with the vendor. By reviewing and improving, you can enhance your vendor relationship, and achieve your project and business goals.

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?