When it comes to business, it’s rarely wise to “go it alone.” Whether you’re a growing startup or a global enterprise, you probably make use of other companies (service providers, consultants, suppliers, developers, manufacturers, etc.) to help you build your products, serve your customers and manage your business. As author Fabienne Fredrickson puts it, “You can’t be good at everything. In fact, you shouldn’t be.”
We rely on third-parties to do the things we can’t do or simply don’t want to tackle. But with every vendor relationship, we have to recognize a certain degree of risk:
What happens if the vendor fails to deliver?
Could problems with the vendor impact our reputation or financial wellbeing?
What level of access do they have to our confidential information?
How dependent are we on this provider, and what would happen if the relationship were terminated?
These are just a few of the manyquestions we need to ask every time we engage an outside resource.
Managing risk within the confines of your own business is hard enough. When you tack on risk associated with vendor relationships, the complexity only grows. As business leaders, we have to carefully manage vendor relationships to protect our customers, employees and stakeholders, but the process can be daunting.
So where do we begin? I have a few ideas. Recently, I teamed up with Dave Hulsen, co-founder at RFP365 (and an old college buddy of mine), to share our collective experiences in vendor risk management. We’ve both been involved in vendor selection, evaluation, contract review and performance monitoring throughout our careers, and we’ve written some practical guidance to help you define or enhance your own vendor management program. The result is a new e-book titled, “Vendor Risk: Find It Before It Finds You.” Dave and I have broken down the process into four key areas:
1. Identify Sources of Vendor Risk
Understand a range of factors you should consider when evaluating vendors and the risks they pose to your organization.
2. Define Policies and Procedures to Manage It
Document your process for evaluating, selecting and monitoring vendors. Ensure that relationship owners know their responsibilities.
3. Find Risk in the Vendor Selection Process
Build vendor risk evaluation into your RFPs. Perform assessments and due diligence, and identify red flags in the contract review process.
4. Monitor Vendors Over Time
Carefully onboard new vendors and monitor their performance and adherence to your requirements throughout the relationship.
I invite you to download the e-book today. Whether you’re just getting started with vendor risk management or you’re building additional structure and rigor into your program, I hope the guide helps you move in the right direction. Remember: Vendor relationships are a natural part of business. It’s up to us as leaders to make sure those relationships are healthy and productive.
Vendor Risk: Find It Before It Finds You
Actionable Guidance for Identifying and Managing Risk That’s Hiding in Your Vendor Relationships