Recently, a CEO of a credit union reached out to us with a story that is all too familiar in vendor management. For years, two different departments had worked with two different vendors to do essentially the same job, and the CEO was paying twice for the same service. To make matters worse, both vendors had long-term contracts.
This kind of outcome is a result of what is termed “silo thinking,” where each department operates separately and independently of each other—in other words, the right hand has no idea what the left hand is doing. This short sightedness not only leads to vendor duplication, but also to patchwork vendor management in which vendors are working for you that have very little or no relationship to one another. It’s like, as our title suggests, focusing on rearranging deck chairs on the Titanic.
If you want to get out of patchwork vendor management, you need to think bigger.
Systems thinking, lifecycle vendor management and reaching your goals
Systems thinking is a systematic approach to vendor management that evaluates all of the inter-relations between a vendor solution, other systems to be used, vendor risk, vendor performance, results measurement, and feedback to evaluate the vendor. Done correctly, systems thinking provides a way to establish and manage the usefulness of the vendor and the amount of time you will need that vendor. In other words, the vendor lifecycle.
At Maple Street, we know the importance of systems thinking in which all departments interact with one another and vendor lifecycle management—because combined, it is the best way for institutions to get the most efficient and cost-effective use from their vendor management relationships program. Here are three steps to getting the results you want from your vendors while delivering a positive return.
1. Engage in Strategic Vendor Planning
Involve all departments in reviewing your current vendors in relation to short- and long-term goals, not only for the department, but for the institution as a whole. That way, instead of evaluating and managing vendors in a vacuum, you will be able to develop an overall strategic plan based on which vendors have the capabilities to help you now and can continue to help you innovate in the future, and which need to be terminated and replaced. How long the vendor is useful and when it needs to be replaced is that vendor’s lifecycle. Because you have engaged in systems thinking, the results will benefit your whole institution and your members/customers, not just one department.
2. Contract to the vendor’s lifecycle
When you need to replace a vendor or get a better contract from one with a useful lifecycle, Maple Street’s professional negotiators are here to get you the best rates and terms possible. Knowing the vendor’s lifecycle enables us to know how long you will need that vendor and what the correct term of the contract should be. We know where the hidden fees and traps are in contracts that can save you millions. And we know how to put remedial measures in place to make vendors perform. We also know how to successfully exit or terminate a contract to your advantage.
3. Ending the vendor lifecycle
Just like onboarding a vendor, ending the vendor lifecycle has its own challenges. Maple Street pros are here for you for this key step. Unlike patchwork vendor management, where vendors can continue long after their usefulness, vendor lifecycle management gives you the maximum use at the minimum cost. To make sure there are no loose ends before termination, Maple Street pros will review your contract to ensure all contractual obligations have been fulfilled and any ongoing vendor obligations, like warrantees that include continued service or support, stay in place, or exit with the contract. We will make certain that the vendor pays you any due compensation, and we will make sure the vendor provides it before the vendor is released. Once the vendor has been officially offboarded, its vendor lifecycle is over.
If you think your institution may be guilty of arranging chairs on the Titanic, step up to Maple Street’s Next Level Vendor Management, the only complete vendor management solution and robust software platform combined. In addition to gaining fair, risk-balanced vendor performance, our clients have become masters of systems thinking and lifecycle vendor management to achieve the results they expect from their vendors and successfully compete. Give us a call at 800-513-6839 and let’s get started.