There are several reasons why it is important to establish a Vendor Management Team when deciding to venture into outsourcing. But before looking at these, let us first define what proper Vendor Management or VM really is.
VM consists of a person or a team whose aim is to ensure that third party service providers stay within the required SLA. Through this team, you are able to maximize your outsourcing investment through optimum performance, reduced risk and costs and ultimate compliance.
Businesses usually enter into outsourcing arrangements for two reasons: cost cutting and access to expertise. These are the objectives that must be the focus of the VM. With the unstable economy making us all very protective of our investments, it is even more crucial to have a VM responsible for monitoring your outsourcing providers. Your VM will also free you to concentrate on your core competencies instead of being distracted by the management of the vendors. It is what makes outsourcing beneficial to the growth of the business.
The main task of a Vendor Manager is maintaining the harmonious relationship between the business and the service provider. If both are living up to the standards set out in the contract, then all is well.
The VM is also responsible for scrutinizing the performance of the supplier. It does not merely check for errors, but they also look for ways to improve the business function being outsourced. How does the new manpower handle the job?
That idea is not limited to the manpower level of course. VMs must be asking the question: have all the problems been solved after outsourcing or did the vendor make it worse? If yes, then the VM should help select a new service provider - if the problem is the overall performance and coordination.
The bottom line importance of a Vendor Management Team is to protect the investment of the business and make sure the ROI goes beyond what is invested. They think strategically and provide suggestions to the management of both the business and the vendor on how to improve the performance of the business function. Though they are not necessarily part of the management that will make the strategic decisions in the business, their reports and professional opinions will matter.
For further information please contact:
Bruce Mills
Joint CEO & Director
3W IT Consulting | IT Contracting
Free Call: 1300 857 773
P: +61 7 3897 3009 | F: +61 7 3102 6280 | E: bruce.mills@3w.com.au | W: www.3w.com.au
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