Vendor, outsourcing, partner or performance manager – the control of external service providers goes by many names and is a critical factor in the success of a business relationship. Depending on the organizational structure and the extent of the outsourced capacity, the role may be divided into different areas of responsibility within outsourcing management, or, in smaller organizations, it may be concentrated in a single person who orchestrates the various interfaces from different departments. Often the role operates in the tension between internal and external capacities that „compete“ with each other.
To achieve the objectives of outsourcing, effective management and support of external capacities play a pivotal role – the vendor manager bears significant responsibility in this function. Juggling all these aspects at the same time is not an easy task. Unclear structures create extra work and lead to sub-optimal performance, dissatisfaction in the collaboration and, ultimately, avoidable costs.
In companies with limited experience in collaborating with external service center providers, the role is often not clearly designed. Instead, existing employees gradually assume the responsibilities or handle them as project managers. In companies with an established growing service provider structure, the question often arises at what point control functions should be merged into suitable organizational units instead of relying on existing departments as interfaces, such as a separate contract management or user management for external resources.
In any case, it is worthwhile to deal intensively with the role and the professional design of the management activities – as well as selecting experienced and suitable employees who can manage the business relationship professionally and assertively.
The vendor manager is the crucial factor for stable cooperation and long-term good results. The following qualities are important:
The responsibilities of the vendor manager
The larger the service organization, the more specialized the functions become. The tasks cover two major subject areas:
Strategic / administrative functions
This primarily includes contract management. The service contract establishes the foundations of collaboration and data protection, commercial agreements, and operational requirements (SLAs). It is essential to monitor these aspects and update them continuously based on business needs.
Once the outsourcing organization reaches a certain size, partner management guarantees a holistic view of the service provider portfolio in terms of strategic alignment, evaluation, and selection of suitable vendors during procurement decisions (tenders) and when relocating work types and lines. This includes professional onboarding of new service providers and project management when external partners are involved.
In operational control, the main tasks are to ensure smooth operations and ensuring compliance with the agreed service level agreements (SLAs) and quality requirements. Performance control involves continuously measuring and transparently presenting the performance of the service providers. If deviations occur, the vendor manager works closely with the service provider to identify measures and improve performance. He is responsible for the efficient delivery of the service provider’s services and, on the other hand, calls for the necessary support from all internal units to enable the external partner to deliver the agreed-upon services.
The vendor manager acts as the main point of contact (SPOC) for any questions or concerns of the service provider and directs them at the right interfaces, such as IT, reporting, planning and forecasting, process and product management, and billing.
Successful vendor management requires a collaborative approach
The principle of collaboration should be a shared understanding of the challenges and needs of both parties. The relationship between a company and a service center provider goes beyond simply purchasing external workforce. It is based on trust, a willingness to cooperate and shared goals. The processes that are outsourced are closely integrated and designed for long-term relationship. Through a successful partnership, companies can benefit from the service provider’s expertise and resources to deliver a high-quality customer experience. From the customer’s perspective, the external partner is not perceived as a service provider but as a representative of the respective company and must therefore be enabled to deliver similar services as internal resources.
Conclusion: Vendor management is relationship management
The vendor manager should be an integral part of a well-designed outsourcing organization with clear responsibilities and defined control processes. He has the responsible task of achieving three objectives in parallel, which need to be prioritized to current priorities:
This can be achieved through a strong and partnership-driven relationship, requiring expertise, experience, and a balanced approach from the individuals acting. If the role of the vendor manager is aligned with the specific service requirements and filled with the right person, there are great opportunities to achieve the goals of outsourcing.
Stefan Wimmer – Senior Consultant