The use of vendors in executing work is a great option for many companies. However, when it comes to vendor management, everyone needs a little help sometimes. Vendor management is the combination of processes, procedures, and tactics used by the people who initiate the contracts and oversee the work output completed by the outsourced contracted resources. With that said, how can you best determine what you need and where to start in order to optimize your vendor management practices? Let’s talk about some do’s and don’ts of vendor management to achieve business goals and tackle the hurdles with scaling growth-associated work demand.
When it comes to utilities, everything from massive expansions to sustaining maintenance needs are being mitigated through utilization of contract labor. Business growth happens for many reasons; when it does, existing models, processes, people, or even technology might cause resource constraints that are no longer able to support the demand or required skillset found inhouse.
Pitfalls of poor vendor management
Utilization of outside partners can help with reaching and meeting goals when work demands exceed what internal resources can handle. However, utilization of external partners comes with costs outside of the assumed bottom line of paying for additional resources. Common vendor management pitfalls include the following:
- Cost of internal resources overseeing vendors and their work
- Lack of adequate processes or procedures in place to onboard external partners
- Cost of overseeing and maintaining outsourcers’ work output along the way
- Overall lack of internal standards around control of the expected output
All of these pitfalls can result in missed deadlines, change orders, financial and quality inefficiencies, as well as overall frustration for both internal and external resources.
How to improve vendor management practices and build lasting vendor relationships
In the utilities space, contracted labor might be utilized in different areas of the business, such as design engineering, field construction, IT, or even oversight of projects for both capital and strategic efforts. Utilizing contractors can be critical for utilities in achieving the business goals in place and keeping the lights on – and there are ways to prevent the pitfalls of outsourcing work for your organization. By applying certain mitigations along the way, you can ultimately produce an effective, high output of work, as well as build strong and trusting relationships with your outsourcing partners.
Set the relationship up for success from the beginning
Before any work begins, build in the following preventative measures with vendors at the contract level. By taking these steps, expectations are set between the parties so standards can be incorporated into the execution of the work. Additionally, vendors can be held accountable along the way, and in the rare case something goes wrong, legal obligations can be upheld.
- Set quality standards and reporting expectations from the contractor in the actual statement of work (SOW) or MSA.
- Identify status tracking, reporting, communication, and ownership of basic status management tasks.
- Define and document the critical milestones or threshold criteria for key outputs.
Establishing strong contractual obligations is something Sendero helps many of our utilities clients with today so they can protect themselves as they enter into agreements with vendors.