By working with vendors, small businesses have access to a wealth of opportunities. An insurance agency can outsource its information technology, for instance, while an information technology firm can contract with a third party for software development. Thanks to the Internet, geographical boundaries have even been removed from the outsourcing processes, allowing businesses to work together from across the world.
However, these partnerships have created new challenges for growing businesses, many of which have learned the hard way that an all-inclusive contract can be essential for any business partnership. Even with the best agreements in place on the front end, occasionally issues will arise that can force businesses to work with the vendor to find a resolution. When that happens, here are three tips that can help you arrive at the desired outcome, without creating a permanent rift.
Plan for Conflicts
When crafting contracts and Service Level Agreements (SLAs), a business should build in conflict resolution as part of the terms. These terms should look out for the interests of both parties, outlining the terms under which the agreement may be invalidated. This agreement should also outline the frequency and method of communication between the vendor and the business, as well as how matters will be handled should both parties be unable to come to an agreement.
It’s important that all terms be outlined in writing before work begins. Agreements should include details of the services the vendor promises to provide, the skills and talents that the company possesses, all delivery dates and repercussions if a due date is missed, and what the expected outcome of the project will be. If a conflict arises, all too often the vendor goes back to these agreements to determine whether or not a business is engaging in scope creep. Remember to consult with an attorney when negotiating or drafting agreements.
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From the outset, a business and its vendors should consider their working relationship a partnership. Whether the vendor is local or international, regular meetings should be scheduled to discuss the project’s progress and any issues. Instead of constantly criticizing the work a vendor is doing, a business should acknowledge the work done, even when recommending changes. When a business shows a vendor respect, that vendor will most likely be much more responsive in return.
Instead of dealing directly with vendors, assign someone in your company to take charge of vendor management and stave off any issues before they arise. Ideally, this will be a personable employee who has an attitude of peacemaking. Your stakeholders may be angry with the vendor, but your liaison can serve as an impartial, calm force in communicating any issues. Because the liaison isn’t directly involved, he or she won’t be emotional in any communication.
In the event issues can’t be resolved internally, a professional arbiter can often be a great resource. This option is much less costly than legal action, and often a mutually-beneficial agreement can be drawn up, whether the company and vendor continue to work together or not.
Working with vendors is increasingly becoming a standard part of doing business today. By choosing the right professionals within your organization to communicate effectively with outside suppliers, your business can have successful partnerships with each of its vendors.
If you want to learn more about managing risk, visit the Dun & Bradstreet B2B business credit guide.
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