Managing Vendors – Articles by Jim Everett

Tips on managing vendors, skills and competencies required

Agreements & Vendor Managers

Posted on | August 12, 2009 | CLICK HERE TO COMMENT OR ASK QUESTION

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When agreements are created thoroughly and carefully, then the management of the outsourced project will be easier and be more likely to ensure the required deliverables and outcomes by the vendor.

Contracts are a crucial element of working with external service providers. A good contract is a summary of the process of information gathering, communication, negotiations and agreements, definition of deliverables, work to be performed, timeframes, terms and conditions, obligations and rights of all parties.

A large project at company-level may be governed by an agreement or contract negotiated at high levels. The Vendor Manager is given a completed contract and agreement, and it becomes that person’s job to ensure the work is done according to the agreement.

In other cases, for a departmental project, the Vendor Manager may be responsible for the full outsourcing lifecycle, by defining the work, selecting and engaging a provider, managing the delivery, and ensuring integration with company business.

Once a vendor is selected, they contract to perform the agreed work to a set standard for an agreed fee. The client agrees to pay the provider upon delivery or completion of milestones, or on a regular basis against an agreed set of service levels. Central to the management of a project or program is whether the contract delivery is measured by a results and outcomes, or activities and process.

But a contract does not drive or guarantee performance. It sets the groundwork, and formalizes expectations, but the drivers of delivered performance are in the client-vendor relationship, and the management on both sides of the relationship.

And when the vendor is offshore, and in another country, cross-cultural elements add a further layer of complexity to management and the way in which agreements are treated.

If there is a supply chain, a Vendor Manager must know how this is connected, which vendors are part of it, what expectations have been set, what risks and contingencies are.

Where the initial sourcing and selection is handled centrally, or by a specialized sourcing function, those negotiating with the provider and framing the agreement should work closely with the Vendor Manager.

Once an agreement is signed and the vendor begins work, a Vendor Manager will be managing the ongoing relationship, delivery by the vendor, and ensuring integration with the recipients of the service and other stakeholders.
Specifically, the Vendor Manager role will typically include:

  • managing by milestones, standards or benchmarks, deliverables, service levels
  • interpreting the emerging requirements as the project moves forward and evolves
  • ensuring payment against milestones, service levels, or metrics in the agreement
  • handling change as an adaptation to changing market or economic conditions
  • negotiating and renegotiating terms
  • handling terminations, as well as transfers and handoffs to other vendors

The Vendor Manager needs to know and be clear on what the contract means and why certain elements and terms are included, the significance of the elements, and how much scope there is for renegotiating or adapting to meet the project and vendor.

For professionals first taking on outsourced projects, managing providers will be very different from managing employees or internal projects. We address this career shift in podcast episodes, other articles, and on our workshops.

Click to listen to or download Contracts and Agreements,  a 13 min audio which goes into more depth.

Download the PDF transcript (4 pages) of the audio.

For even more detail, send me an email at Think180, and request a free copy of my entire extended article (9 pages).

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Think180 helps companies get the best results with their service providers (vendors). Our core product is an in-house customizable workshop for Delivery Managers, or entire teams who outsource. This has been run successfully for many clients, including Palm, Philips, Harrah's, BP, Vantive, Avaya and others.

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