Disciplined Agile

Vendor Management Practices

Some methods or frameworks will choose to prescribe a single approach, but the Disciplined Agile® (DA) tool kit instead promotes an adaptive, context-sensitive strategy. DA does this via its goal-driven approach that indicates the process decision points you need to consider, a range of techniques or strategies for you to address each decision point, and the advantages and disadvantages of each technique. Figure 1 presents the process goal diagram for the Vendor Management process blade.

Copyright Project Management Institute All Rights Reserved Vendor Management v5.5 Intake Requests Lean backlog Agile backlog First In First Out (FIFO) queue Select Procurement Strategy Lean Agile Procurement (LAP) Traditional procurement (bespoke) Traditional procurement (commodity) Straightforward purchase Automated purchase Identify Potential Partners Issue request for proposal (RFP) Issue request for participation (RFP 3.0) Issue request for information (RFI) LAP lean procurement canvas Preferred vendor list Research market Identify Partner Strategy Vendor coalition Best-of-breed vendor One-stop-shop vendor Select Potential Partner(s) Collaborative session (single vendor) Compare submitted proposals Interviews/information sessions LAP big-room evaluation event (multi-vendor) Short-list potential partners Vendor bake off Choose Collaboration Model Contractors join customer team Full outsourcing Multi-vendor team(s) Partial outsourcing Develop Working Agreement Collaborative session (single vendor) Customer-driven negotiation LAP big-room evaluation event (multi-vendor) Capture Working Agreement Agile contract Contract Informal agreement Master services agreement (MSA) Memo of understanding (MoU) None Purchase order (PO) Choose Contract Model Challenge based Cost based Fixed price Lease Joint Venture Outcome based Outcome based extreme Outcome based with profit sharing Service subscription Target based Target based with bonus/penalty Target price Time and materials (T&M) Grow Partner Relationship Co-develop opportunities Co-improve Co-innovate Co-learn Support teams End Partner Relationship Cancel contract(s) Complete contract(s) Litigate Govern Partnerships Address partnership risks Monitor partner performance (endeavour) Monitor partner performance (overall) Review contract performance Review partner performance Validate purchases

Figure 1. The process goal diagram for vendor management.

Click the diagram to open the interactive DA Browser, where you can learn more about the decision points and options of this goal.

The process decision points that you need to consider for vendor management are:

  1. Intake requests. This is how your vendor management team pulls in requests from their stakeholders. An incoming request is examined and if ready it is prioritized and put on the team's work backlog. The appropriateness of the request, in particular does it include the right level of detail, would be determined by the team.  
  2. Select procurement strategy. Choose the appropriate approach to procurement given the nature of the potential offerings to be obtained. Staff are often empowered to make simple, low-risk purchases at their own discretion, whereas some purchases are better suited for a traditional approach and very complex purchases for a lean/agile strategy. Context counts.
  3. Identify potential partners. Choose the most appropriate approach to identifying the potential provider of an offering (service or product) to partner with. This decision will be driven by the complexity and uniqueness of the product(s)/service(s) to be procured as well as the capabilities and capacities of our existing partners.
  4. Identify partner strategy. What is your approach to identify potential vendor(s) to partner with for a given procurement request? Do you prefer to work with large vendors that have a broad range of offerings or smaller vendors with deep expertise in a specialized area?
  5. Select potential partners. The strategy that you choose to select potential partners to work with will have a significant impact on both your ability to find a good fit with them and on the relationship you will have going forward.
  6. Choose collaboration model. How will you work with a partner to fulfill a given agreement?
  7. Develop working agreement. What strategy will you apply to develop a working agreement with a partner(s)? Are you able to work with them collaboratively, perhaps even with their potential competitors/partners involved too, or will it be more of a formal negotiation? The way that you develop the working agreement with your partner(s) will help set the tone of your relationship moving forward.
  8. Capture working agreement. How will you document a working agreement, if at all, with a partner(s)?  In general, the greater the risk involved with the partnership the more robust the documentation will need to be.
  9. Choose contract model. What approach will you take to pay a partner for their products or services? The contract model that you agree upon will motivate the way that both you and your partner(s) behave when you're working together and will motivate your willingness to evolve your relationship over time.
  10. Grow partner relationship. How will you work with organizations over time to nurture and grow your partnership? Is your relationship simply transactional or do you strive to grow your businesses together?
  11. End partner relationship. Eventually all good things come to an end. There are several different strategies that you can employ to end a relationship with a partner organization. 
  12. Govern partnerships. The collaborations that you have with vendor/partner organizations need to be governed effectively. This will include validating that you've received what you've paid for, that partners are behaving as you expect them to, and monitoring and acting on your overall risk working with partners.