Build a vendor list your whole team will use

Begin by compiling a complete inventory of all current vendors providing goods and services to your organization. Review existing contracts, accounts payable listings, and departmental vendor records. For each vendor, document: - Contract terms and renewal dates - Annual spend volume - Primary contact and relationship owner - Access to proprietary data, customer information, or protected systems - Current performance satisfaction level This baseline assessment is essential before evaluating preferred vendor status and identifies immediate consolidation opportunities.

Categorize vendors by the types of goods and services they provide - such as IT services, office supplies, professional services, marketing, facilities management, and logistics. For each category: - Calculate total annual spend volume - Assess business criticality (what happens if this vendor fails?) - Identify compliance requirements (SOC 2, HIPAA, GDPR, industry-specific) - Evaluate switching costs and alternative availability Rank categories using a risk matrix to prioritize where to focus evaluation efforts first. Critical categories with high spend deserve the most rigorous vendor qualification process.

Establish clear, measurable criteria for preferred vendor status. Your qualification framework should include: **Mandatory Requirements:** - Financial stability (credit ratings, years in business) - Insurance coverage (liability, cyber, professional) - Compliance certifications (SOC 2, ISO 27001, industry-specific) - Data security and privacy practices **Performance Criteria:** - On-time delivery rates (target: 95%+) - Quality metrics and defect rates - Responsiveness and communication standards - Customer service satisfaction scores **Commercial Terms:** - Pricing competitiveness vs. market benchmarks - Payment terms and early payment discounts - Contract flexibility and termination clauses Different vendor categories may require different criteria weightings - a software vendor needs stronger security standards, while a supplies vendor prioritizes delivery reliability.

Evaluate candidate vendors against your established criteria through a structured assessment process: **Information Gathering:** - Request proposals (RFP/RFQ) for competitive categories - Collect and verify certifications and compliance documentation - Review pricing structures and total cost of ownership - Check references from similar-sized organizations in your industry **Evaluation Process:** - Involve end-user teams in evaluating service quality and responsiveness - Conduct site visits or demos for strategic vendor relationships - Score each vendor objectively using your weighted criteria - Document evaluation findings and rationale **Selection Decision:** - Select 1-3 preferred vendors per category to maintain competitive options - Negotiate preferred pricing and terms with selected vendors - Establish service level agreements (SLAs) where appropriate Keep evaluation documentation for audit purposes and future reference.

Create a centralized, easily accessible document containing all approved preferred vendors. The vendor directory should include: **Vendor Information:** - Company name and contact information - Services/products provided - Contract terms and pricing agreements - Designated internal relationship owner - Ordering instructions or procurement codes **Distribution and Training:** - Publish on your intranet or procurement system - Notify all departments of the preferred vendor policy - Train employees on when to use preferred vendors - Explain the exception request process for non-preferred purchases - Clarify escalation procedures for urgent procurement needs **Policy Enforcement:** - Define consequences for bypassing preferred vendors without approval - Set up approval workflows for exception requests - Track compliance rates by department

Establish a recurring review cadence to maintain vendor list quality: **Review Frequency:** - Quarterly reviews for critical/high-spend vendors - Annual reviews for lower-risk categories - Immediate reviews triggered by performance incidents **Performance Metrics to Track:** - Delivery reliability and on-time performance - Quality issues and defect rates - Pricing changes vs. contract terms - Responsiveness and issue resolution time - Invoice accuracy and billing disputes **Review Activities:** - Collect feedback from internal stakeholders - Compare performance against SLAs and benchmarks - Identify underperformers for improvement plans or replacement - Monitor market for emerging alternatives with better value - Update pricing and terms during contract renewals **List Maintenance:** - Add new vendors who meet qualification criteria - Remove vendors who fail performance standards - Archive historical performance data for trend analysis Keep the preferred vendor list current to maintain its credibility and usefulness across the organization.