3 Mistakes to Avoid When Managing Vendor Relationships

Maintaining strong working relationships with vendors is critical to running a smooth fleet operation.

To find out what makes and breaks these relationships, UFP recently spoke with Ron Henne, transportation supervisor for Eversource in Connecticut and Western Massachusetts; Matt Gilliland, director of transportation and facilities for Nebraska Public Power District; and Mel Holloway, product manager for global fleet management company ARI.

For all three men, customer service stands out as a major factor in determining if a vendor is going to be a short- or long-term partner.

Nebraska Public Power District has been working with several suppliers for 10 to 20 years because they continue to meet the fleet’s customer service expectations, according to Gilliland.

“We look for a vendor who will fix or supply it right the first time, on time, and at a fair price,” he said.

In addition to great customer service, vendors that provide total support – including post-sales support such as training – help seal the deal for Henne.

But what prevents fleet managers and vendors from establishing effective relationships? Be cautious of these three pitfalls.

1. Placing Too Much Emphasis on Cost
One mistake fleet managers make is basing purchase decisions – whether for equipment or service – solely on cost. Expecting something for next to nothing is a bad way to start or maintain a strong relationship with a vendor.

“Don’t just look at price,” Henne said. “Do your due diligence. Equipment is not a short-term purchase. You’re making a 10- to 15-year decision. The purchase price could be great, but what’s it going to cost you down the road? For example, you might save $1,000 on a piece of equipment, but roadside assistance is not included with the five-year warranty and could cost $5,000 to have it delivered every time it has a problem. So you really have to check everything. It’s the total package – the parts, the training, the warranty.”

Gilliland echoed that sentiment. “Poor customer service, poor delivery timelines and shoddy work cost more in the long run than any money saved up front,” he said. “A wise man once told me this: There are three kinds of service: fast, cheap and good. Pick two because you can never have all three.”

He strongly recommends a matrix approach to vendor selection that includes inputs such as local presence, past performance, response time, cost, warranty and support systems.

2. Poor Communication
It is no secret that excellent communication is essential to any strong relationship, but fleet managers and vendors sometimes struggle to effectively interact with each other.

“Many fleet managers have their own preferred communication methods, but above all communication needs to be timely and efficient,” Holloway said. “[Fleet management companies] need to blend a variety of techniques ranging from proactive push reporting to phone calls and in-person communications to ensure they are meeting the client’s need for information.”

Both Henne and Gilliland prefer to communicate with vendors via email.

However, fleet managers and vendors should choose their communication method based on what’s happening within their operation at the time. “If you’re going to buy 50 new trucks, that’s not an email,” Henne said. “That’s when you need to schedule several meetings. For a high-risk or complex situation, you’re going to want to be face to face.”

Holloway advised fleet managers to communicate often. “Don’t wait until there is a problem to reach out to a vendor,” he said. “Treat vendors as if they are a valued part of your team. Communicating changes about the fleet or equipment will help your vendors to stay up to date on your company’s needs.

“Remember that your vendor also has a business to run,” Holloway continued. “Scheduling conflicts, deadlines, cash flow and business growth are problems faced by most vendors. Awareness of and responsiveness to each other’s issues can help build long-term, satisfying and beneficial relationships with vendors.”

3. Unclear Goals and Expectations
Fleet managers must avoid ambiguity about their goals, objectives and expectations, particularly when it comes to expressing them to their vendor partners.

“Make sound decisions,” Henne said. “Develop your spec – consult internal users and make sure it’s detailed with everything needed – and then set out to bid with all the requirements.”

Determine which one vendor can provide what you need, when you need it, and for the right price. Evaluate everything from response time to contract terms to costs. Relationships take time to develop, so select a vendor with whom you and your fleet will be able to grow. At the same time, train vendors to meet your needs if necessary.

When a vendor understands how important customer service is to you, for example, they will be encouraged to work harder in that area. An understanding of your goals will help them make the best decisions in your favor.

About the Author: Grace Suizo has been covering the automotive fleet industry since 2007. She spent six years as an editor for five fleet publications and has written more than 100 articles geared toward both commercial and public sector fleets.