Smaller companies often secure contracts requiring management of sub-vendors. Effective vendor management is possible without a large staff, extensive software or overly complicated processes. Whether your vendor is providing products, services or both, effective vendor management requires commitment to a simple but structured process. This article summarizes key points of a field-proven process.

Your vendor must be in agreement with their contractual performance and delivery obligations. Include those obligations in your RFP and PO. Do not assume anything, unless you like surprises.

Every sub-vendor job must have a purchase agreement containing normal contractual requirements along with the following topics and the actions described thereafter:

  • Defined scope of work including performance activities and deliverables
  • Clear statement of contract deliverables (product, services & documentation)
  • Agreed contract execution schedule including performance milestones
  • Defined in-process and final inspection requirements, including disposition of non-conformances
  • Clear definition of what constitutes purchaser’s final acceptance

To ensure success, contract execution actions must include:

  • Establish a single point of contact between the vendor and purchaser through which all communication flows. Doing otherwise creates the potential for confusion, risk of delays and additional cost.
  • Conduct an initial kickoff meeting where all contract requirements are reviewed and agreed between both parties.
  • Both parties must agree on and rigorously follow a status-reporting schedule.
  • Document all discussions, meetings, agreements and variances – avoid undocumented verbal commitments.
  • During contract execution, the use of meeting minutes, action (punch) lists, document submittal forms and other management tools are recommended. The potential for mayhem resides in wiggle room.
  • For some inspections or surveillance, specialized third party services may be required.

Like people, no two vendors are managed the same. Each vendor contract requires evaluation to establish the minimum management techniques necessary to achieve the desired deliverables. For assistance with vendor management challenges, contact the author via [email protected].