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Do You, Should You Manage Vendors?

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October 01, 2008
Vendor | Relations
Pam Angelucci - p.angelucci@comcast.net

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© 2008 Hospitality Upgrade. No reproduction without written permission.

Vendors. You can’t live with them, can’t live without them.  While everyone has heard their share of horror stories around a difficult vendor, there are plenty of companies that have developed and maintained excellent partnerships with vendors that translate into enhanced and more profitable business to the customer.  What did they do that created such a difference in the value of the relationship between vendor and customer?

So much emphasis in the hospitality business is placed on customer relationship management.  Let’s face it, building a relationship is not only the key to success with customers, but also in everything else, so why not invest that time with your vendors?   Think about your best guests, do you treat them differently than other guests?  Do you generate more profit from them?  Now compare that to the relationships you have with your vendors. Do you have vendors who consistently meet and/or exceed your business relationship expectations?  Should you be treating them differently?  Before you go out and suggest your company hire a full time specialist to manage your vendors, a few simple steps will help you create your own management program and understand how and when to create these vital partnerships.

Hospitality, like any other business, cannot be conducted without vendors. Vendors in the hospitality industry take on many forms.  Having the right vendor and relationship management in place with each vendor will improve overall business operations.

Is it necessary to have a partnership or a strategic relationship with every vendor? IT must categorize vendors by their level of impact on the business or by the type of product or service provided, enabling you to effectively manage the assignment of resources.

Consider the following vendor matrix below.

Once you understand the relationship of each of your vendors to your business needs, the process of developing the right management of those vendors becomes clearer.  Obviously, a tactical vendor providing commodity items, while still vital to your business, does not require as much time and attention.  For a strategic partner or niche partner, ask yourself, what is lost if I do not manage the relationship properly?  This will help to determine the level of resources necessary to effectively manage and make the most of the partnership.

To achieve higher success rates with your partners that increase your business value, you need to shift focus to some principles that will complement your current strategy.

You already know not to enter into a partnership with a company without a detailed business plan and contract, but placing too much emphasis on what each of you will do, not how you will do it after the contract is signed; will cause you to overlook a critical need. 

>>Know the vendor’s goals and objectives as a company.

>>Understand your account and support team’s goals, and what they need to accomplish to be perceived as successful.

Successful partnerships depend on the ability of individuals on both sides to work almost as if the same company employed them.  For this to occur, vendor governance and success metrics need to be in place. Both companies need to understand:

  • How you each make decisions
  • How information is shared and what the organizational structure is
  • What policies and procedures are in place and how those work to support this partnership (or not)
  • What the overall culture of the vendor and the customer’s businesses is
When significant time is invested up front discovering and defining the relationship that is desired, the partnership will generate significantly greater value than if focus is given to only defining business goals and contract terms.

Another common mistake is not spending as much time on managing internal stakeholders as you do your partnership.  Creating a clear understanding of partnerships within your own organization is as important as managing the partnership itself.  Many misconceptions or internal disagreements about a partnership within your business can be avoided or cleared up by having regular internal meetings to surface and resolve issues before meeting with the vendor.

Finally, promote a system of accountability.  As companies deepen their relationships with IT providers, the need for results-based accountability grows increasingly important.  Results-based accountability not only safeguards against overblown budgets but also ensures open and consistent communication between customer and vendor, which is key to building a successful and mutually profitable partnership.

Pam Angelucci is a hospitality consultant in the Atlanta area. She can be reached at p.angelucci@comcast.net.

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