Vendor Management And Procurement – A Marriage Made In Heaven Or Somewhere Further Down South?

I’m a Forrester analyst, but lately I’ve been feeling more like a marriage counselor.  Not that I mind that role; you get to hear all sorts of juicy gossip and sordid tales of woe. But I didn’t anticipate it in my job at Forrester. I’ve spent many 30-minute counseling sessions (inquiries) listening to Vendor Management dudes (professionals) complaining about their Procurement spouses (colleagues) and vice versa. It appears that both parties are approaching married life (work) from two different sides of the bed. It feels like this arranged marriage is doomed to fail. But enough with the marriage analogy; this is a serious issue that seems to be pretty prevalent in the corporate world today. 

So what are the major areas of disconnect? 

1. 1. Procurement is goaled to save the company money and mitigate contractual risk. They can best do that by dissecting contracts that are coming up for renewal. They look for opportunities to reduce billable and fixed rates, maintenance costs, and license fees. They also review potential new vendor relationships and ensure that the lowest-cost provider is strongly considered. They act as the fiduciary agents of the company to ensure that the best price is negotiated for services or products the company wants to purchase. In partnership with general council, they also ensure that the T&Cs (terms and conditions) in the contract are appropriate and protect the interests of the company.
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3. 2. Vendor Management is goaled to ensure that third-party relationships are successful and vendor risk is mitigated. This ranges from relationship management to vendor governance. They need to ensure that all strategic vendors are performing per their contracts, are providing innovation and thought leadership in their interactions with their customers, are operating within the policies and standards established by the company, and are adhering to all security, compliance, business continuity, and industry best practices to protect the interests of the company.
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So if both groups are operating with the intention of “protecting the interests of the company” and mitigating risk, why is there a disconnect? The problems seem to lie in the execution. Procurement Professionals often feel that Vendor Management Professionals are too soft and concerned about relationships when interacting with outside vendors. Vendor Management Professionals feel that Procurement Professionals are only concerned with chasing the next dollar savings and are willing to sacrifice the relationship in order to hit their savings goals. 

Lutz Peichert and I will be hosting a great action session at the upcoming Sourcing and Vendor Management Forums in Miami and London next month. The title of our session is: Ebony And Ivory: Creating Alignment Between Procurement And Vendor Management. As we are putting final touches on our session, we are very interested in hearing both war stories and stories of successful partnerships from the lines of battle. 

1. 1. Vendor Management Professionals – What are your areas of frustration as you deal with Procurement? How could they work more effectively with you? What are the things that you really appreciate about your colleagues? Where can you better leverage each other’s strengths?
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3. 2. Procurement Professionals – What are your biggest concerns when dealing with Vendor Managers? Do you see value in the work they are doing for the company? Do you feel there are areas where you can better partner with them in the relationships your company has with strategic vendors? What are the things that you really appreciate about your colleagues?
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5. by Jan Erik Aase