4 Strategies for Stronger Vendor Relationships
- November 14, 2018
- Quantivate
In today’s complex business environment, vendors often function as a critical piece of the puzzle in your organization’s capabilities. Healthy third-party partnerships can supplement your organization’s successes, but poorly managed relationships can significantly increase risk.
A third-party risk report found that more than half (57%) of organizations surveyed don’t keep an inventory of all the third parties with which they share sensitive information. A similar majority (60%) also felt underprepared to perform due diligence on their vendors.
These risky vendor management practices demonstrate the importance of not only vetting new vendors, but also maintaining visibility into all your third-party relationships and taking appropriate steps to manage risk.
Effective vendor relationship management involves more than an initial contract review or occasional performance monitoring. The best path to mutually beneficial, long-term contracts is a management program with smart maintenance strategies.
Let’s look at several ways you can strengthen your existing vendor relationships:
How to Strengthen Your Vendor Relationships
1. Establish Good Communication and Information-Sharing Practices
While this doesn’t mean that you provide an all-access pass to your systems, it is important to share necessary information in a way that allows third parties to provide better service. As with any relationship, good communication is key. This includes keeping vendors informed about developments like new product launches, software updates, new regulations, and upcoming contract reviews.
2. Regularly Review Performance
Monitoring vendor performance not only reduces service problems and failures, but also keeps the relationship balanced and helps align the goals of both organizations. When considering vendor management solutions, look for ones that offer options like vendor classification and risk scoring, incident tracking, and reporting tools that give you valuable insight into the health of your vendor relationships.
3. Be Audit-Ready
Regulatory agencies are increasingly focusing on how organizations manage sensitive information. Thorough due diligence reviews ensure that the data and information your vendors have access to is organized for easy documentation and retrieval.
Steps that simplify the audit process include:
- Establishing consistent criticality rankings
- Documenting due diligence activities
- Scheduling annual due diligence updates and audit reviews
4. Maximize Value
Vendor management can be complex and time-consuming. Look for ways to maximize your efforts by simplifying and centralizing your organization’s third-party management processes. When organizations establish consistent methods for storing and tracking important information, completing due diligence, and monitoring performance, it not only saves time, but also increases oversight and reduces risk and management costs.
Do you know who you’re doing business with?
At Quantivate, we understand the importance of ensuring you’re working with reliable vendors and other third parties. We developed our Procurement Solution to help organizations of all sizes efficiently collect and analyze due diligence documentation, complete contract and performance reviews, and assess third-party risk — while also integrating enterprise risk and continuity data — all in one platform.
Still exploring the advantages of upgrading to a vendor management system? Check out our brief breakdown of benefits to consider: