As we continue to operate in uncertain times, it is important for every company to be proactively assessing their overall operations to determine how best to prepare for both best case and worst-case outcomes. This is especially true for your Vendor Management Program.
As many companies invest 50% or more of their capital with outside vendors and third parties, having a properly structured and resourced Vendor Management Program is essential to mitigate risk and ensure regulatory compliance.
As you consider how best to operate a Vendor Management Program, it is critical to determine whether it makes sense to resource your program internally or outsource some or all of your Vendor Management Program to provider with a proven approach and dedicated subject matter experts.
When used effectively, outsourcing can be both a way to optimize your costs and operational performance while also accessing dedicated subject matter experts who offer a best practice approach to Vendor Management.
Here are some key considerations your company should be looking for as you determine if an outsourced managed service solution will create value for your company:
Does the solution align with your team and resourcing needs? As you assess your internal staffing, resource plan and operational processes does the proposed managed solution allow you to free your staff up to handle other activities while having confidence the managed service provider will deliver the service and outcomes you require.
Subject Matter Expertise
You need to ensure the managed solution is designed and resourced by a team of subject matter experts that have the appropriate mix of technical expertise and industry expertise to provide you the required outcomes and best practice recommendations to achieve your objectives.
Is the managed solution enabled by a system which enables the provider to operate efficiently and effectively? Can you integrate your existing system(s) with the system the provider uses so you have access to data and reporting you need to maintain your oversight responsibilities?
Scalable and Reliable Service Level Performance
Can the provider meet your unexpected demands (higher number of new vendor diligence than you anticipated) and align with your growth plans to scale with your accordingly?
Are You Ready for Outsourcing?
If you are unclear if outsourcing makes sense for you, consider the following as leading indicators that outsourcing some or all of your Vendor Management Program is something you should be considering:
If lowering costs are a priority for your company, in many cases outsourcing a vendor management activity like your due diligence will allow you to save on salary and benefits costs as you are paying a fee for the specific work being performed which may vary vs paying fully loaded overhead which may not be fully utilized.
To streamline your vendor management operations, how better than to free up your internal staff to focus on their core capabilities instead of being distracted by a range of ancillary activities which may not align with their skill set. Working with an external managed service provider enables you to work with a resource that specializes in specific thing like due diligence, procurement or contract management so your team can focus on day-to-day, more strategic activities.
Best Practice and Program Maturity
When you want to update your program and ensure you are implementing industry best practices, it is a great idea to consider outsourcing. Not only do you achieve all of the other benefits highlighted above you also have continued access to industry best practices as your provider can actively bring you the trends they are experiencing in the work they are doing with their other clients.
In the end, outsourcing some aspects of your Vendor Management Program can make sense on many fronts. It can send a message to your staff, executives, board members and investors that your take seriously the responsibilities to mitigate third-party risk, optimize your operating costs, ensure regulatory compliance and strive for excellence.
As you begin exploring outsourced vendor management solutions, we are here to help you start this journey to optimize your Vendor Management Program.