Is Vendor Management Important?
I have this event forever scarred in my memory. . .
Let me start with a bit of background leading up to that day. . .
I was young in my career – well, compared to today at 40 plus years.
I think I had been working in the computer repair industry for almost 10 years at that point. I was running a tech support call centre for a computer manufacturer – and they were having problems.
30% of the PCs were failing in the first 2 months. Something would happen that would erase the system board BIOS – the brains that start and run the PC itself. The PC was completely bricked – it couldn’t even start up properly.
The only way to fix it was to replace the complete system board. And that required an onsite service call and parts – free for the customer, but an expense to the manufacturer.
I sorted through thousands of service calls and reviewed hours of support desk data – and found the problem.
The vendor making the system boards had one jumper left in the manufacturing position – one jumper out of place put 100% of these computers at risk – and a 30% failure rate.
Then came that day:
I walked into the office of the President of this computer company.
I was carrying about a 4-inch-thick printout of service data – remember the 130-column tractor feed continuous form paper – yeah, 4” of that – thousands of service calls with the bad ones manually highlighted.
I told the president about the failure rates, the cause, and asked how to notify the vendor so that they could change this jumper and eliminate the 30% failure rate.
He waved his hand at my printout data. Then he said something like this, “Don’t bother me with this. I hire responsible vendors. I don’t need to manage them.”
Two years later, this computer manufacturer was out of business.
Vendor management is a topic that is very near and dear to my heart. I will never forget that day when a half penny fix could have saved that computer company hundreds of thousands of dollars.
But the CEO didn’t think he needed to manage his vendors.