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You’re about to start a procurement process. How can you select and manage vendors efficiently?

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You’re about to start a procurement process. How can you select and manage vendors efficiently? Procurement is a crucial function that can impact your project’s quality, cost, and timeline. Choosing the right vendors and maintaining good relationships with them can make a big difference in your project’s success. In this article, you’ll learn some tools and tips for vendor selection and management.

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Ravi PATHAK

Procurement Specialist @ Air Products | Ex Adani | BE | MBA
Shridhar Firodiya

Sr. Supply Chain Manager at Tesla | Strategic Sourcing | Commodity Buyer | I help to accelerate e-mobility ecosystem by…
Mario K.

Procurement Consultant | Strategic Supply Chain | Budgeting & Forecasting | Procurement Strategies | Risk Management |…

1 Define your needs

Before you start looking for vendors, you need to have a clear idea of what you want to achieve and what you need from them. Define your project scope, goals, objectives, deliverables, requirements, specifications, and budget. This will help you narrow down your options and communicate your expectations to potential vendors.

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Omar Dorado Guerrero

Analista de telefonia, en Grupo Promociones y Mercadeo Asociados SA de CV.
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Tener muy claras nuestras necesidades, facilita tener trazabilidad en nuestro proceso de compras, asi mismo podemos comunicar nuestras necesidades a los proveedores e ir eligiendo la mejor opcion.

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2 Research and evaluate vendors

Once you have your needs defined, you can start researching and evaluating vendors that can meet them. You can use various sources of information, such as online reviews, referrals, testimonials, case studies, portfolios, and industry reports. You can also create a request for information (RFI) or a request for proposal (RFP) to solicit more details from vendors. You should compare vendors based on criteria such as experience, expertise, quality, price, availability, reliability, reputation, and compatibility.

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Shridhar Firodiya

Sr. Supply Chain Manager at Tesla | Strategic Sourcing | Commodity Buyer | I help to accelerate e-mobility ecosystem by developing world class supplier network
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In my experience, picking the right vendors starts with good research. I'd check their customer references, experience in delivering same products, reviews from other colleagues if they are an existing supplier, production capabilities, and global footprint to see if a vendor is reliable. It's important to know if they can handle our needs and if they meet industry standards. Looking into their reputation, financial health, and track record is crucial too. By doing this groundwork, we can make sure we're choosing vendors who not only fit our criteria but also share our values and goals. This upfront research makes the procurement process smoother and more efficient.

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Omar Dorado Guerrero

Analista de telefonia, en Grupo Promociones y Mercadeo Asociados SA de CV.
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Realizar la evalucacion de proveedores, para cualquier empresa es muy importante, porque siempre debemos trabajar con aliados estrategicos, que nos faciliten nuestras actividades. y que tengan la capacidad de actuar y respaldarnos en caso de cualquier eventualidad.

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3 Negotiate and finalize contracts

After you have shortlisted a few vendors that meet your criteria, you can start negotiating and finalizing contracts with them. You should aim for a win-win situation that benefits both parties and aligns with your project objectives. You should also consider the risks and contingencies involved and how to mitigate them. You should review the contract terms carefully and make sure they cover aspects such as scope, deliverables, deadlines, payments, warranties, liabilities, and dispute resolution.

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Omar Dorado Guerrero

Analista de telefonia, en Grupo Promociones y Mercadeo Asociados SA de CV.
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Creo que esta es la parte mas importante, en el proceso de compras, debido a que se cierran los acuerdos comerciales, y tambien se dejan muy claras las responsabilidades y obligaciones tanto del cliente como del proveedor.

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4 Manage vendor performance

Once you have signed the contracts, you need to manage the vendor performance throughout the project lifecycle. You should establish clear roles and responsibilities, communication channels, reporting mechanisms, feedback loops, and performance indicators. You should also monitor and measure the vendor’s progress, quality, and compliance with the contract terms. You should also provide regular feedback, recognition, and support to the vendor and address any issues or concerns promptly.

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Omar Dorado Guerrero

Analista de telefonia, en Grupo Promociones y Mercadeo Asociados SA de CV.
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Un tema muy importante es tener la trazabilidad de nuestro proyecto, y de nuestro proveedor. con esto podemos identificar si el proveedor de nuestra eleccion fue el mejor para realizar nuestro proyecto, e incluso midiendo avances y resultados podemos dar nuestros puntos de vista al proveedor y de esta manera hacer mas estrecha la relacion cliente-proveedor

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5 Evaluate vendor outcomes

At the end of the project or the contract period, you should evaluate the vendor outcomes and the overall vendor relationship. You should assess how well the vendor met your expectations, delivered value, and contributed to your project’s success. You should also identify the strengths and weaknesses of the vendor and the areas for improvement. You should also document the lessons learned and best practices for future reference.

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Ravi PATHAK

Procurement Specialist @ Air Products | Ex Adani | BE | MBA
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analysis of previous vendor results, such as comparing and evaluating different suppliers based on their service delivery, quality, reputation, affordability, and reputation. Finding the best suppliers to meet your demands and forming enduring relationships with them is a crucial business strategy.

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Omar Dorado Guerrero

Analista de telefonia, en Grupo Promociones y Mercadeo Asociados SA de CV.
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Realizar la evaluacion de proveedores nos facilitara en proyectos futuros, la eleccion de proveedores ya que conoceremos las areas de oportunidad y las fortalezas de cada uno.

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6 Maintain vendor relationships

Finally, you should maintain good relationships with your vendors after the project or the contract is completed. You should thank them for their work, provide constructive feedback, and acknowledge their achievements. You should also keep in touch with them and update them on any changes or developments that may affect them. You should also consider them for future opportunities and referrals and build long-term partnerships with them.

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Brennon Cardone

Managing Partner Technology Integration & Partners @revsparkai | I help you solve complex business problems! How can I help? | $1B Global Vendor Manager & Technology Strategy
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Managing vendors is simply reverse sales. In my experience many miss this opportunity and treat vendors as a needed service instead of a relationship. I put in as much work to maintain relationships with my contacts as they did contacting and selling to me. The results, for me, spoke for themselves. With most of my vendors, I always have a simple path to any reasonable favor. This approach leads to better contract negotiations, better pricing, and better service. I treat my vendors like they are part of my family. I have worked for companies that encourage very vanilla contact (everyone treated the same) and ones that want relationships. The vanilla approach never yields better results and I have negotiated 100's of deals.

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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?

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Ravi PATHAK

Procurement Specialist @ Air Products | Ex Adani | BE | MBA
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Depending on the requirements of the company, different criteria may be employed in vendor analyses. Cost-effectiveness, product or service quality, lead times for delivery, customer support, regulatory compliance, adaptability, technical know-how, and the financial stability of the supplier are typical determinants.

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Mario K.

Procurement Consultant | Strategic Supply Chain | Budgeting & Forecasting | Procurement Strategies | Risk Management | Processes & Policies (CIPP | CIPA | CISCP | CISCM | Six Sigma Green Belt)
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Communication and Relationship Building: - Foster open communication with vendors. - Establish a strong working relationship based on trust and transparency. Risk Management: - Identify potential risks and develop mitigation strategies. - Regularly assess and update risk management plans. Continuous Improvement: - Seek feedback from both internal stakeholders and vendors. - Use insights gained for continuous improvement in vendor management processes.

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Abhishek Gosavi

Program Manager Supplier Quality Development, Magna Powertrain, EU
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1. Cross functional approach: inputs such as approval from different departments such as feasibility analysis with product design, onsite process Audit by quality, benchmark analysis from cost engineering etc. should be prerequisite for nomination 2. Cost of total ownership: determining class st of total ownership and taking decisions based on that instead of just piece price will be more beneficial to organisation. 3. Factor in supplier performance in serial production on bonuses of strategic purchasing department

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Vendor Negotiation

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You’re about to start a procurement process. How can you select and manage vendors efficiently?

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1 Define your needs

2 Research and evaluate vendors

3 Negotiate and finalize contracts

4 Manage vendor performance

5 Evaluate vendor outcomes

6 Maintain vendor relationships

7 Here’s what else to consider

Vendor Negotiation

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