Employing Vendor Management Best Practices in Fleet Services
About the Client
The client is a multinational leasing and fleet management services provider. The business fleet services provider has gone on to become one of the largest privately held vehicle fleet management companies in Europe.
The Business Challenge
The biggest vendor management challenge for fleet services providers varies depending on the size of the business. A detailed analysis revealed that the major challenge revolved around vendor risk assessments and documentation. Intuitively, this makes sense as small and mid-sized fleet services providers lack the ability to force suppliers to supply the documents; whereas, larger companies can parry their buying power to push the issue.
Top Challenges Faced by the Fleet Services Provider
Problem Statement 1
The client faced several challenges in procuring the right documentation from a globally dispersed team of vendors.
Problem Statement 2
Challenges associated with vendor risk assessments further leveraged their predicaments in analyzing the vendor data obtained from disparate information sources, all of which needed to function harmoniously and efficiently.
Problem Statement 3
The fleet services provider faced major challenges in effectively managing the contracts and negotiations with suppliers to enhance the process efficiency.
You’re not alone, every business has some sort of vendor risk management challenge. And the good news is that there are ways to overcome such challenges, and we can help if needed. Get in touch to more about vendor management best practices.
Solutions Offered and Value Delivered
To get the most out of your vendor management process, you need to take a strategic approach to build and maintaining good vendor relationships. Good suppliers are hard to come by, so it’s important to nurture your relationships with the suppliers that you are likely to engage in long term contracts. The experts at SpendEdge developed a comprehensive approach to implement vendor management best practices to help the fleet services provider to tackle their key challenges. We recommend that vendor managers and other procurement officials follow these principles to start managing vendors effectively:
The initial step revolved around strategizing the approach to the adoption of vendor management best practices. It involved defining the structure, responsibilities, and resources to put a formal vendor management best practices approach in place. The main objective was to drive the right behavior and obtain business outcomes for all the collective third-party relationships.
The second phase revolved around establishing an optimal process for making the right decisions and assigning decision that comply to vendor management best practices. Agree on authority and flow for decision making.
Phase three focused on ensuring optimal management of the vendor contract life cycle and the commercial aspects of the vendor relationship. The other aspects included- managing and improving vendor performance, and monitoring and mitigating vendor risks.
The final phase of the engagement involved the use of assessments and industry data to track vendor management operations and success rates. Responsibilities include managing and improving vendor performance through the implementation of vendor management best practices.
By following vendor management best practices, the client gained detailed insights on the approaches to enhance their process efficiency. The business fleet services provider used the best practices as guidelines to identify potential suppliers. This enabled them to engage with suppliers that have the greatest potential to meet the strategic goals of their business.
Adopting vendor management best practices are vital for the economic well-being of a company. An effective vendor management structure must be established in the company in order to streamline activities. Wonder where to start?
What is vendor management process?
Vendor management primarily deals with managing, administering, and guiding product and service vendors through a systematized approach to drive vendor behavior and optimize business outcomes. It is also used interchangeably to describe activities such as- researching and sourcing vendors, obtaining quotes with pricing, capabilities, turnaround times, negotiating contracts, managing vendor relationships, gauging performance, and ensuring on-time payments. Though several businesses believe that vendor management is simply about finding the supplier with the cheapest price for a product or service, it’s about more than that.
A robust vendor management best practices process deals with streamlining the processes for heightened efficiencies and managing vendor relationships to ensure that the agreements made are mutually beneficial for both parties. With vendor management best practices in place, you can properly establish service, quality, cost, and satisfaction goals and choose and manage third-party suppliers that help you achieve those business goals. A typical vendor management process consists of the following steps:
Establishment of the business goals: It is much easier to select and manage vendors when you have clearly defined performance parameters to compare and contrast.
Selecting the vendor management best practices that match the company’s performance characteristics: Choosing the right vendor is a critical task that is closely related to optimizing operational results as every vendor will have their own unique set of capabilities.
Managing the vendors: Effective supplier management will require companies to periodically monitor their performance and output in order to ensure contract terms are being followed, approve or disapprove changes, provide feedback while developing effective vendor relationships.
As multinational businesses continue to chase after every opportunity to minimize costs and enhance efficiencies, business fleet services providers have come under the spotlight. Running fleet services is undeniably a costly exercise but through effective fleet management and the use of vendor management best practices, one can yield significant savings – especially when approached from an international perspective.
Today, business fleet services are turning more and more into a global business and several of the largest players in this market posses the capability to provide fleet services globally, we have chosen to focus this study exclusively on the European fleet services market. Europe is by far the largest market for fleet services globally and also in many regards the most advanced. Despite the fact that other fleet services providers in North America, for example, are characterized by distinct differences as compared to the European market, we believe that the crux of our vendor management best practices assessment will ultimately have relevance on a global scale.
Vendor management best practices
Even if you’re current role doesn’t require you to directly work with vendors, chances are you’ll come into contact with them at some point in your career. We’ve listed the top vendor management best practices to create a mutually beneficial relationship that will advance your organization’s goals:
Build and maintain strong vendor relationships: Working with new vendors requires businesses to build a relationship with your point of contact and open the lines of communication. By understanding each other’s needs, expectations, the preferred method of communication and the best times to meet, companies can save several hours of lost time and aggravation in the future.
Set expectations and define business goals: Defining your desires is another key step in adopting vendor management best practices. It’s imperative that the vendor is capable of doing the job they’re hired for, but it doesn’t end after the contract is signed. Expectations, both internally and with your vendor, should be revisited throughout the contract period to ensure things are getting done efficiently.
Provide insight to current and future needs: For businesses to thrive successfully there is a need for constant coordination between the vendors and suppliers. Make sure you leverage your vendors’ experience with other companies, and knowledge of the industry when you’re strategizing and augmenting your strategies.
Do what’s best for your organization: It essential to adopt practices that work best for your organization. Vendors may try to sway you to do something that doesn’t match your brand’s core values. Always hold firm on your allegiance to what matters most for your organization and let vendors know these deciding factors. Also, having a comprehensive guide will save time and frustration as they create solutions.
Why partner with SpendEdge?
With over a decades experience in the field of procurement and sourcing, SpendEdge has been a forerunner in offering smart procurement solutions to 500+ businesses across the globe. We offer in-depth, powerful insights that help our clients develop effective procurement strategies to maintain a winning edge in the market. SpendEdge’s unique approach to procurement transformation encompasses robust procurement strategies and technological innovations to help businesses rapidly build the infrastructure required to fuel high-performance digital procurement enterprises. As a true end-to-end procurement solutions provider, we combine our dedicated procurement offerings with best in class innovative approaches to tackle all vendor management challenges. What’s more, our smart procurement solutions not only act as a key driver of productivity and savings but also accelerate the overall impact on the organization.
Vendor management will be one of the key capabilities that companies will have to master. SpendEdge is ready to support you in deriving the necessary vendor management strategies and actions. Request a FREE Demo to know more about vendor management best practices!