CASE STUDY: The Importance of Vendor Management

Why Vendor Management is Important

Vendors and vendor management are an incredibly important part of most business operations.

It’s how high performing your vendors are, and how well you’re managing them that makes all the difference.

Your vendors are a crucial component of the successful performance of your supply chains. Poor performing, or poorly managed vendors can deeply disrupt your business operations.

Today’s insights are a case study in vendor management. The organisation had no centralised or systemised means for managing their talent vendors. And they were paying for it. We show how CXC’s services were able to optimise the company’s investment in their vendors and streamline their talent operations.

vendor performance management process

The Situation

The organisation had poor visibility of the talent vendors to their business. These vendors were across the following categories:

The problems were many, including:

  • ROGUE HIRING: Permanent and contingent talent were being engaged outside of vendor agreements; there was poor adoption of company policies for vendor usage.
  • DECENTRALISED VENDOR MANAGEMENT: The talent vendors to the organisation weren’t managed centrally. So, contracts, rates and terms of service were poorly negotiated and managed.
  • UNCONTROLLED COSTS: relationships with vendors weren’t strong. So, the company’s ability to negotiate standardised, market-aligned rates was limited. Also, they weren’t privy to vendor discounts or incentives otherwise available.
  • INEFFICIENCIES: poor administrative management of vendors also contributed to exploding costs. Expired contracts, duplication or loss of vendor data, and low visibility of the vendor roster was frustrating for all parties.

 

vendor management

The Solution

When CXC were engaged by the client, we immediately recognised the first step to a better vendor management situation: technology.

CXC recommended a Vendor Management System (VMS) suitable to the client’s existing technology stack: a cloud-based solution to centrally manage all the vendors to the talent supply chain (in this instance, particularly contingent talent).

The VMS enabled the client’s complex talent population, and their suppliers, to be completely visible. The solution comprised of:

  • A cloud-based software platform that illuminates all vendors, contracts, rates and the talent sourced through them.
  • The ability to rate vendors based on key performance indicators such as talent quality, company and statutory policy compliance, cost-effectiveness (amongst others).
  • Visibility of under-performing vendors, where the company could trigger corrective actions, or off-board them.
  • Transparency of spend across the entire vendor roster, as well as by individual vendor, by talent group, by company department.

In addition, CXC helped the client to establish the following vendor management best practices:

  • A vendor management policy was put in place. This informed senior management of the vendor management activities, the changes being made, and the adoption required by all departments. The policy included elements such as driving better performing vendor relationships, more innovation to help streamline the supply chain, risk mitigation strategies and vendor lifecycle management.
  • We helped the client align the vendor management strategy to the contingent workforce strategy. In this way, we could sync departmental demand for contingent workers with the right talent supply.
  • We advised the client on best practice processes for vendor review and selection.

 

vendor management best practices

The Results

By establishing a new vendor management protocol, the company was able to achieve the following:

  • Better establish a two-way relationship with vendors, which helped to boost collaboration, innovation and helped drive competitive talent advantage
  • Significant reduction in redundant vendors. The roster was streamlined to fit with the client’s contingent talent needs
  • Cost transparency became a huge advantage in helping to eliminate investment wastage
  • The remaining vendors were placed into performance schedules, delivering a better, more robust service outcome for all parties
  • The risk of non-compliant, rogue vendors operating in the business, was removed
  • The quality of contingent talent engaged in the business was significantly improved

This was a classic case study in adopting the right technology and strategic principles to transform vendor management and performance. With vastly improved talent operations, the client’s vendors and workers all benefitted.

 

You may find this brief whitepaper from Deloitte useful, in your vendor management research. In the meantime, if you’d like to discuss vendor management with me, you can reach me here. I look forward to hearing from you.

 

 

 

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