Vendor Management
What is Vendor Management?
Vendor Management is a structured approach to receiving the best service and value from a supplier. The core of such a program is the establishment of an ongoing communication channel with a vendor.
Why Vendor Management?
Vendor Management ensures that a vendor will continue to provide quality goods and services at agreed upon pricing, throughout the term of a written agreement. It also creates the appropriate forum to proactively address changes in business needs as they arise.
Who’s responsible for managing the vendor?
The individual, function, department or college authorizing and requesting supplies or services from a vendor is required to appoint an Agreement Administrator or individual responsible to oversee the work to be performed by the vendor for the specified contract or agreement.
What makes up a Vendor Management Program?
- A Written Contract or Agreement that binds a vendor to obligations and sets acceptance criteria for payment by Boston University
- A Scope of Work document that clearly outlines the key responsibilities of the supplier and Boston University for each technical or functional specification, and/or service requirement
- Detailed Key Performance Indicators (KPIs) that establish specific performance targets for key aspects of the SOW.
What goes into the Scope of Work document?
To avoid any misunderstanding of what services are requested and what services are to be performed, documenting any and all such expectations in the Scope of Work will explicitly delineate the functions to be provided and formally identify the responsibilities of all parties (including BU).
How are Key Performance Indicators (KPIs) developed?
Key Performance Indicators (KPI) are simple metrics used to quickly and easily measure the vendors performance against the service level expectations defined in the Scope of Work. (e.g. if you stated in your Scope of Work that you expect next day delivery for all your orders, then the KPI would be 100%, any score less would point out to you and your supplier that the supplier is falling short of its expectations.)
What needs to be in the written Contract, Agreement or Purchase Order?
Be sure to include the Scope of Work and service expectations as well as any reporting requirements (what’s included and how often). It is also advisable to address any intellectual property or ownership of data issues, insurance and bonding minimums, indemnification and liability clauses and of course the term, termination and compensation criteria.
Are regular meetings with a vendor really necessary?
After an agreement is signed with a vendor, the most important piece of any vendor management program is the ongoing communication with that vendor. Business meetings should be scheduled monthly or quarterly with the vendor to discuss any open items, or to evaluate the continued success of the business relationship. Success of any relationship depends upon communication!