As companies continue to increase their strategic reliance on vendors, outsourced services, and collaborative alliances, so too do business leaders need to rethink their approach to vendor management.
In fact, the sheer number of vendors engaged in organizations of all sizes is projected to grow substantially, making it more difficult for traditional procurement organizations to manage. Thus, it should be a strategic imperative to establish a vendor management discipline through a best-in-class vendor management office (VMO).
High-performing VMO’s are increasingly demonstrating their value in Fortune 100 companies, as well as in smaller organizations. Each is scaled following the organization’s objectives and needs, but the results increasingly visible by the day. Regardless of size, there are common objectives and measures to drive VMO effectiveness and best practices. They are:
1. Revenue enhancement and increased margins
2. Optimized vendor performance and leverage
3. Reduction of run-rate expenses and budgeted capital expenditures
4. Improved quality (services, operations, product, supply chain, etc.)
5. Vendor innovation / marketplace differentiation
6. Measured risk reduction and compliance
7. Improved process efficiency and cycle time
8. Vendor collaboration framework
9. Analytics, reporting, and business intelligence
10. Governance model ensuring the following: strategic alignment, value realization, portfolio management, sponsorship and accountability, risk management, VMO process and policy adoption
Achieving a successful VMO implementation requires a comprehensive approach and methodology. One that can seamlessly weave the multiple processes, responsibilities, policies, tools, and technologies together in every vendor relationship.
Best-in-class VMOs are tightly aligned with the company’s strategic and tactical business objectives. They drive significant value from vendor relationships and serve a vital role in the execution of business objectives, driving organizations towards achieving targeted business outcomes over the long term.
Learn more about WGroup’s vendor management advisory services here.
Steve has over 30 years of IT management and consulting experience, with deep expertise in transforming IT organizations, IT sourcing strategy, contract development, and negotiations. He is known for his pragmatic approach to problem-solving, which enables clients to quickly implement and benefit from his recommendations.