As technology continually is changing our world it is also changing how we interact with our third-party vendors and suppliers. Many of the services that we once maintained internally are now commoditized and provided externally, as is our data, and we must have an even greater focus on selecting the right vendors and increasing our due diligence to ensure a long-term successful relationship.
Third party relationship management is a lifecycle it continually evolves, but the first step is often planning. The key to creating a successful relationship is first and foremost clearly defining and understanding your internal requirements and risks prior to involving a third-party.
- As you begin your project the first step is to determine who should “own,” the project, product or service. Oftentimes this is a business owner, sometimes it falls within a department or a subject matter expert. If it’s part of a bigger project, it’s important to look beyond the project timeline, who should own the longer-term relationship?
- Involve all the stakeholders or subject matter experts that will impacted by the project or change in the vendor. The earlier you can start socializing the change the more likely you are to gain acceptance across the organization.
- Define the specifications or requirements for the product or service and assign a weight to each requirement, is this a “must have,” or “nice to have.” This allows each team member to evaluate vendors/products/services on the same scale as you move forward in the process and helps to eliminate personal bias later in the process
- Develop a list of third party providers whom you will present the specifications. It is a good practice to first start with existing vendors, to confirm if they can meet your needs.
- Develop a request for information or proposal. An RFI, allows you to gather information from vendors without requiring a formal proposal, typically this is a quicker process and is often useful if you have a wider candidate pool. Often vendors are more likely to reply as they require less information and while typically include pricing estimates often don’t require legal language.
- Present requirements to potential Third-Parties and include in the third party selection process. Upon issuing the request, managing the bid process can be a time consuming process, typically 3 weeks is the minimum time to return a RFI/P, depending on the length of the request.
Clearly understanding your project needs, and the third-party vendor requirements in advance is the first and important step towards success of selecting a vendor. In the next blog, we will discuss the due diligence process. To learn more about how RSM can assist you with your other business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.