As your company grows, you may consider establishing a vendor management office (VMO). This unit of an organization will handle basic procurement functions like evaluating the performance of third-party suppliers. A truly effective VMO goes beyond these basic functions to create opportunities for a more optimized relationship with your vendors. The VMO helps you to navigate everyday interactions with vendors and, in this way can help you to maintain amicable long-term relationships with your suppliers.
Creating a dedicated office that specifically handles vendor management services can be truly helpful to an organization. The most important of the advantages, of course, is saving monetary resources while maximizing the value of your existing vendor relationships. Even if it means your business needs to move office locations, you should definitely still consider the option. Below is how a VMO can help your company:
It Can Help Financially
The purchasing process can prove to be a serious financial burden to an organization. By streamlining purchasing, a VMO gives you the ability to concentrate spending on vendor relationships that give you the best value for your money. Furthermore, a VMO can also help your organization avoid unnecessary expenses associated with short-term or piecemeal deals.
It Can Help Assess Vendor Performane
Intrinsically linked to the financial aspect of a VMO is the evaluation of vendor performance. Naturally, you want your organization to get the best return on investment, so you need to know whether or not your suppliers are performing according to expected benchmarks or standards. Additionally, a VMO can also properly assess vendor financial health. This reduces the risk of service disturbance in the event of a supplier unexpectedly experiencing financial difficulties.
It Allows You To Determine Business Performance
Lastly, a VMO can also help your organization better understand the details and nuances of your organization’s spending activities. By effectively charting out and evaluating data, a VMO can manage and monitor your organization’s spending in a manner that is truly efficient and one that will allow you to visibly see the value that it provides. This will certainly help you to identify the core values of your business, as well.
What Does A VMO Do?
A VMO can really take a whole lot of work off of your to-do list. In the beginning, these offices will help you to develop a vendor management strategy that is actually effective. Then, along with your help, the VMO can create a list of vendor selection criteria, to simplify vendor selection for a business now and in the future. Finally, they product the bid documents. These documents, at least the ones most commonly used, are a Request for Quote, or RFQ, Request for Information, or RFI, and Request for Proposal, or RFP. In short, a vendor management office takes a whole lot of work off of a business owner’s plate, so you should certainly consider this an option.
If you are considering establishing a VMO, it is essential to understand its ins and outs. To get started, it will be helpful to consult a reliable professional vendor management solutions consultant. A professional counselor like Business Escalation, Inc. can provide your staff with the necessary tools and technologies that can effectively match their skill sets, thus increasing the chances of your project’s success.
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