In the ever-evolving landscape of Vendor Management, a notable paradigm shift is underway. Businesses are transitioning their focus from the traditional pre-contract negotiations to a more comprehensive post-contract management approach. This strategic shift is driven by various factors, with globalisation, resilience, and the need for continuous adaptation playing pivotal roles. But why has there been an increased focus on moving to post-contract vendor management? Here are 6 reasons why you need to shift to post-contract vendor management.
1. Globalisation
Globalisation has been a driving force in reshaping the vendor management space over the last few decades. However, recent challenges, particularly those stemming from the COVID-19 pandemic, have led to a re-evaluation of global supply chains. The trend now leans towards a more localised approach, striking a delicate balance between global and local supply lines to enhance resilience.
With the increasing complexity of global supply chains, a comprehensive understanding of the interconnected web of relationships has become crucial. Beyond first-tier suppliers, the relationships extend to fourth and fifth parties across different parts of the world. This complexity underscores the need for a proactive approach in managing vendor relationships post-contract.
2. Risk Management
The aftermath of the 2008 financial crisis heightened awareness of risk factors, leading to a more comprehensive understanding of supply chain intricacies. Organisations now recognise that a supplier’s risk profile is dynamic and can undergo changes throughout a contract. This realisation has prompted a shift towards post-contract vendor management to effectively respond to evolving risk scenarios.
3. Cost Optimisation
In a global context, understanding and navigating price variations is essential for cost optimisation. With a significant portion of a business’s costs embedded in its supply chain, daily monitoring of supplier dynamics becomes crucial. This proactive approach ensures an informed and efficient strategy to optimise operational costs and overhead.
4. Quality Control
Post-contract management plays a pivotal role in bridging the gap between theoretical commitments and actual product or service delivery. Monitoring and enforcing agreed-upon quality standards are essential to ensure outcomes align with the envisioned requirements. Additionally, compliance and ethics have become integral, with industries implementing standards to manage suppliers in accordance with norms and reduce legal and reputational risks.
5. Compliance & Ethics
Since the financial instability of 2008, compliance and ethics have played a substantial role in addressing the issues that arose during that period. Industries worldwide have implemented standards, best practices, guidance, and regulations to ensure that businesses not only manage their customers in accordance with these norms but also extend the same scrutiny to their suppliers, supply chain, and internal operations.
It’s important to note that the standards applied to internal operations also extend to suppliers, given that the collective delivery on behalf of customers involves both internal processes and supplier contributions. The proliferation of these compliance measures underscores the critical need for strict adherence to regulations. This includes ethical business practices aimed at reducing risks and mitigating the potential for legal and reputational damage. As the business landscape evolves, prioritising ethical standards becomes integral to fostering resilience and safeguarding against adverse consequences.
6. Collaboration and Innovation for Superior Results
Innovation and collaboration are identified as crucial aspects of successful business endeavors. Actively managing performance, relationships, and fostering innovation is paramount for optimal outcomes. Continuous communication and collaboration with suppliers become key drivers of success, highlighting the growing importance of post-contract management.
Kick Start Your Vendor Management in 12 Weeks
As companies begin the shift to post-contract management, it can be challenging to know where to start or where to obtain the resources from.
Brooklyn’s Vendor Management Rapid Start Program is designed to streamline post-contract processes, ensuring optimal performance without straining current resources.
Take the first step towards optimising post-contract processes today! Read more about our Rapid Start Programme here:
