Efficient RFT process v. contract management: Part 2

I've received quite a few requests for the spreadsheet shown in the post below. Many of the emails told stories of working in procurement departments with compulsory go-to-market policies. The following is from Steve Murphy talking about his experiences with a previous employer:

I have worked in procurement organizations that were audited to insure that large contracts were bid every other year and all contracts every three years. The annual audits did not analyze effectiveness just performance against policy. Some of the groups could have been categorized as under-resourced. Most were focused on the daily requisition queue and never looked up to see if there was a better way to get things done.

The audit policy described above is not uncommon, and actually makes a lot of sense from a cost reduction perspective. The spreadsheet model shows that, from a cost perspective, going to market (a relatively easy task) is nearly as effective as managing vendors well (a more difficult task). So if a company recognises that good vendor management is a weakness and doesn't want to invest in improving their vendor management skills then going to market regularly is a reasonable fallback option. But, as most of the emails noted, companies can do better than this one-size-fits-all approach to vendor management.

What the spreadsheet model does not show are the other benefits realisable from good long-term vendor partnerships. I'm talking here about vendors who know a client's business well and can recommend changes to the client's internal processes that reduce cost or who make changes to their own systems to meet an important client's specific needs. This is a win-win situation for both the vendor and the client and generally only occurs in long-standing relationships with a high degree of mutual trust.

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