When entering an agreement with a new vendor, businesses naturally hope for a successful long-term relationship, resulting in a measurable return on their investment. Assuming you have chosen a quality provider, some of the responsibility for a successful relationship lies within your management of it.

The Outsourcing Journal recently analyzed the findings of a survey involving businesses whose relationship with outsourced service providers had been in place for more than one year. The survey revealed that 50 percent of these buyers had assigned an inexperienced employee to manage the relationship with the providers.

Of the 50 percent of participants who did use managers with previous experience, 22 percent admitted that they had chosen someone who had limited experience in this area, or whose scope of experience was limited to managing the process before it was outsourced.

This resulted in some common mistakes and challenges in managing the relationship with the providers, including:

• A tendency to micromanage the provider. For the relationship to work smoothly, a manager needs only be concerned about the delivery of tasks. Details of how the work is carried out are best left to the service provider.
• Trying to improve the provider’s performance level by imposing penalties or offering incentives. This might work with in-house processes, but is not likely to have the desired effect on your vendor.
• Lack of effective communication between buyer and vendor; as a buyer, you will need to have some insight into how your provider plans to handle your company’s processes. A manager should be willing to listen to and understand the provider’s viewpoint on matters of mutual concern. He or she should also be able to effectively communicate the company’s needs and priorities.
• Inadequate skills to manage changes, and to bring the buyer/provider relationship to an optimum level.

Some of the companies in the study did invest in formal training for their relationship managers, but nearly 30 percent did so long after the buyer/vendor relationship had begun to experience difficulties due to the lack of knowledge or experience.

To avoid this problem, and to pave the way for a successful relationship with your providers, be sure your relationship manager has adequate skills in areas such as change management, negotiation, communication, partnering, and project management. Relationship managers can also acquire a great deal of applicable knowledge by reading the latest white papers, books, and articles on the topic of managing vendor relationships.