Managers and executives already understand how critical it is to manage employees. For those who work in the supply chain industry, however, there is the added difficulty of vendor management. Building healthy and effective relationships with your third-party partners is essential to this business sector, and it could mean the difference between success and failure. In order to create sustainable growth, strong vendor management is key — but it requires a great deal of care and attention. Many decision-makers have trouble juggling the responsibilities associated with third-party vendors. As a result, these partnerships can suffer and hinder the efficiency and profitability of the rest of the company.

For example, one of the most common challenges involved in vendor management is excessive administrative costs. Reigning in these expenses requires vigilance, especially when it comes to reviewing processes for workflow, data collection and reporting. Otherwise, you could be duplicating efforts and spending more time and money than is necessary.

Another frequent misstep that managers and executives make is neglecting the flow of communication. Direct, regular contact with your vendor could help prevent unhelpful disagreements and confrontational situations. This is why it is so important to keep the lines open and discuss issues as a team. However, when working with outside parties, many businesses make the mistake of leaving their information unguarded, opening the door to data breaches. If you share a software platform with your partners, be sure that it is protected with all the appropriate measures.

According to a recent study, roughly 39 hours each week are wasted on resolving clerical errors from suppliers. Even more concerning is the poor quality that can occur as a result of issues in the supply chain — this could cost as much as 40% of total operations. However, if you take the time to build stronger bonds between your organization and the third parties who help you, it can be much easier to avoid problems. For more common challenges and solutions in vendor management, take a look at the accompanying infographic.