Republic of the Philippines

DAVAO ORIENTAL STATE UNIVERSITY

INSTITUTE OF BUSINESS AMD PUBLIC AFFAIRS
A University of Excellence, Innovation and Inclusion
Guang-guang, Dahican, 8200 City of Mati. Davao Oriental
 

THE EFFECT OF VENDOR MANAGEMENT STRATEGIES IN POBLACION,

LUPON, DAVAO ORIENTAL

Morales, Princes Faye C.

A Research Proposal Presented to the Institute of Business and Public Affairs

of Davao Oriental State University
City of Mati, Davao Oriental

In Partial Fulfilment of the Requirements for the Degree of

Bachelor of Science Business Administration

CHAPTER l
 INTRODUCTION

Background of the Study

Vendor management strategies is the discipline of managing,

administering, making strategies, and guiding product and service vendors in

an organized way to drive vendor behaviour in order to optimize the business

outcomes. According to Gartner (2014), vendor management is an emerging

discipline that is necessary to invest in to ensure that your organization is

working effectively with vendors and that you are, indeed, generating the

business and service outcomes you require from the deal. The relationship

manager builds and govern the partnership and relationship with one or more

key providers and is the owner of one or more relationships. The vendor

management strategies focuses on the best practices for managing vendors in

four key areas: performance, risk, price, and sales. Good vendor management

prompts vendors to deliver your products and services at the optimal level of

quality and risk, at the required time and place, and at the best price. We

provide research to help you align with stakeholders to achieve business

outcomes, manage and improve vendor performance, monitor and mitigate

vendor risk, manage vendor sales and manage ongoing vendor relationships.

In USA, the sales and management strategies operated independently

of one another. Salespeople worried only about fulfilling product demand, not

creating it. Vendors or the marketers failed to link advertising money spent to

actual sales made. The sales obviously couldn’t see the value of the vendor

efforts. And, because of the group were poorly coordinated, vendor’s new
product announcements often came at a time when sales was not prepared to

capitalize on them (Kotler 2006).

In Mati City vendors, particularly in Baywalk, vendors concerns regarding

to their sales are the significantly relate to the management strategies. Mati City

vendors are clearly aware in having good sales on the supplies they’ve

produce. Some of these concerns are the unsold supplies that affect the sales

and results into another strategy that the vendor needs to do.

The said issues persuaded the researcher to conduct the study to find

out the relationship between the management strategies towards sales

management in Baywalk, Mati City, Davao Oriental. In results, this study will be

the impact of the management strategies and sales management to the

vendors and customers.

 Statement of the Problem

Vendor management is the process that enables an organization to take

appropriate measures for controlling costs, reducing potential vendor risks,

ensuring excellent service deliverability, and deriving long-term value from

vendors. It entails researching the best suitable vendors, sourcing and

obtaining pricing information, gauging the quality of work, managing

relationships in the case of multiple vendors, and evaluating performance by

setting organizational goals.

Vendor Management Challenges

Although there are numerous advantages, some problems must be solved in

order for the organization to run well.

If vendor management isn't done appropriately, a firm may suffer a slew of

problems. The following are some of them:

(1) Vendor Compliance Risk

Having standards in place before engaging with vendors can save you a lot of

time and money. Not all vendors will meet your expectations. It's critical to

pick the correct vendor from a pool of candidates who fulfill your

organization's standards and criteria while also offering high performance.

(2) Risk of Vendor Reputation

Managing several vendors is a difficult task. Furthermore, the quality of work

must be assessed before to entering into a contract, making the procedure

more difficult.

While some vendors may do an excellent job on your project, others may put

up with bad performance and cause all of your deadlines to be thrown off. As
a result, background checks are required before any decision is taken. This

may provide you some insight into key points that you may have overlooked

previously.

(3) Insufficient visibility

While a centralized data storage solution is critical for managing vendor data,

it also provides the organization with a centralized view and increased

visibility, which can lead to better resource allocation and efficiency.

(4) Data Storage by Vendor

As your company grows, having a vendor data storage solution in place

becomes increasingly important. When you don't have a vendor management

system, storing and retrieving data might be difficult, especially if you're

dealing with several vendors for multiple projects at the same time.

(5) Risk of Vendor Payment

Some vendors may have different payment terms than others, while others

may follow industry standards. One of the biggest challenges is figuring out

the conditions and ensuring that payments are always made on time,

especially when working with many vendors at the same time.

Vendor Management Process

We can deduce from this that excellent vendor management is critical. Every

step of the way, an organization must create and implement a strategy to

outline how they will interact with their vendors.

While it is impossible to create a single vendor management process that

applies to all businesses and vendors, we can gather together the

fundamental processes that underpin an organization's start-to-finish vendor

engagement:

(1) Identifying and establishing business objectives

It is critical to identify and create business goals that demand vendor

involvement before beginning the vendor management process. This makes it

easier to understand the needs of each business unit and avoids duplication

of effort and resource waste when it comes to selecting and contracting with

vendors. It also aids in the later stages of monitoring and measuring vendor

performance because these objectives establish relevant measures.

(2) Forming a vendor management group

The formation of a specialized vendor management team should be the next

step after outlining corporate goals. This unified team should be able to

identify vendor management business KPIs. It will serve as a liaison between

the business units and the vendors, ensuring that both parties work together.

(3) Establishment of a database for all vendor-related data

The following stage should be to create an updated and categorized database

of all relevant suppliers and vendor-related information after the business

goals are defined and the vendor management team is up and operating.

There are numerous advantages to this Approach:

(I) It will match the business units' requirements with the appropriate provider.

The administration, for example, can identify the appropriate vendors for office

supplies, computer equipment, and other items.

(ii) cross-vendor comparison will be easier to evaluate after vendors are

classified based on their category.

(iii) It will streamline information - scattered, disparate vendor information will

be housed in a single area, providing insights into the present stage of the

vendors, such as those with contracts in place, those who require renewals,

and so on.

(iv) It will facilitate successful budgeting — you will be able to distinguish

between long-term, vital vendors and short-term, tactical vendors with ease,

and adjust the budget allocation accordingly.

(4) Determination of the Vendor Selection Criteria

After all vendor-related information has been streamlined, updated, and

categorized, you must choose the criteria that will be used to choose all

relevant vendors.

While cost has always been the key consideration for selecting vendors,

businesses are increasingly considering additional factors to determine which

vendor would best meet their needs - after all, the lowest cost does not

always imply the best value. Financial stability, previous expertise in the field

of work as the firm, industrial recognitions, the procedures followed by the

vendor, economies of scale, and their legal/regulatory records are all non-cost

aspects to consider when selecting vendors. To have a holistic review of the

vendors, all of the aforementioned criteria must be considered.

(5) Vendor Assessment and Selection

The vendors must be assessed based on the selection criteria and, if relevant,

the bidding procedure at this point.

The pricing structure, scope of work, and how the requirements will be met,

terms and conditions, expiry and renewal periods, and other aspects of the

presented proposals must all be thoroughly evaluated. This will ensure that
the vendor provides the most value to your company. Look for savings options

that aren't readily apparent.

Examine the vendors' internal strengths and weaknesses, as well as the

impact of external opportunities and threats on your transaction and vendor

management.

(6) Finalizing Vendors and Developing Contracts

So, you've finally found your match. It's time to wrap up the contracting

procedure and bring on your vendors.

The legal and finance teams, as well as senior executives dealing with the

vendors, are typically allocated to the contracting stage. After the contract is

finalized, the rest of the business units receive it and engage with the

vendors. In the long term, this is inefficient because business units are the

ones who are actually interacting with suppliers on a daily basis and have

significant insights into how to improve the vendors' operational performance.

As a result, at the very least, all relevant stakeholders must be involved in the

decision-making process.

Techniques to Improve Your Vendor Management Strategy: Best

Practices

You've put in place a vendor management procedure that's optimal for your

company. Vendor management, on the other hand, does not end with the

selection of vendors. There are techniques that can be used.

Excellent practices that complement your procedure and can improve the

efficiency of your organization's vendor management. Let's have a look at

some examples:

(1) Be explicit about your expectations.

When working with vendors, it's critical to spell out the organizations' business

goals as well as the vendors' expectations. Let the vendors know what your

current and future requirements are, as well as how they relate to your

company's goals. It will allow you and the vendors to be on the same page

and, as a result, interact more effectively over time. It aids in the

establishment of benchmarks, the reduction of risks associated with vendor

performance and compliance, and the evaluation of vendors.

(2) Make sure you set deadlines that are both reasonable and practical.

Given your objectives and expectations, it's critical to set dates that the

vendors can reasonably meet. Setting unreasonable deadlines hinders vendor

performance and value creation, as well as increasing risk and preventing

genuine collaboration.

(3) Work together with your vendors to keep long-term partnerships going.

Isn't it true that the word 'partnership' has been mentioned several times? It's

significant since just negotiating pricing and performance with vendors leads

to the execution of a transaction. However, collaborating and involving

vendors in brainstorming how to meet the goals and expectations leads to the

development of beneficial, long-term relationships. Collaboration allows both

the company and the vendors to come up with new ideas for how to get the

most out of their partnership's value creation.

(4) Create KPIs to track vendor performance.

How can we know if the vendors are meeting the agreed-upon expectations

and business objectives? We'll need Key Performance Indicators (KPIs) in

place to track the many aspects of suppliers and determine whether the

vendor management strategy is working.

The KPIs vary every organization and are determined by what they consider

to be significant when evaluating vendor performance.

How Do You Measure Value for Money in Vendor Management?

* Relationship Management; the vendor's dedication, flexibility, and creativity

are all factors to consider.

* Cost control; calculated reduced pricing, order expenses, and so forth.

* Staff knowledge, order accuracy, adherence to specifications, warranties,

and other factors are used to assess quality.

* On-time delivery, response time to order issues and emergencies, and other

factors are used to evaluate delivery.

* Customer Satisfaction is a term used to describe how satisfied a customer

is.

(5) Evaluate vendor risks in order to reduce them.

This is undoubtedly one of the most significant approaches for ensuring that

vendor management meets expectations.

Vendor risk assessment is a multi-step process that begins when you

recognize a requirement for a vendor and continues thereafter.

Financial, payment, operational, compliance, and data security are just a few

of the risks associated with vendor management. At each stage of the vendor

management process, you must identify all vendor-related hazards, analyze

their impact depending on your risk appetite, and devise mitigation strategies.

The dangers that pose as risks are constantly changing, so make sure you're

keeping an eye on the organization's internal and external environments,

evaluating the controls you have in place, their efficacy, and updating them as
needed. This degree of due diligence will assist you in minimizing vendor-

related risks and ensuring that vendor performance meets all standards.

Benefits of Vendor Management

An organization can get the following benefits by implementing proper vendor

management:

(1) Increased Selection

Your firm may benefit from a broader number of vendors by putting in place

proper vendor management, which will provide you more options and lower

prices.

A bidding battle amongst vendors can benefit your business while also

guaranteeing that you get your money's worth.

(2) More effective contract management

In a multi-vendor environment, the difficulty of maintaining contracts,

documentation, and other critical information in your organization is

exacerbated by the lack of a vendor management system.

By putting in place a good VMS, your company will have a centralized view of

the current status of all contracts, as well as other relevant information,

allowing you to make better decisions and save time.

(3) More effective management of performance

Implementing a vendor management system will provide you with a

comprehensive view of all of your vendors' performance.

This might help your company determine what is working and what isn't. This,

in turn, leads to increased efficiency, which improves the organization's

overall performance.
 (4) Improved Vendor Relations

Managing numerous vendors at the same time is never easy. Some sellers

may be quite profitable, while others may not. The key to a successful project

completion, however, is managing vendor relationships.

You gain from having all vendor-related information in one place since you

obtain all essential information at once, and it can impact your decision-

making process, making it easier!

(6) A Better Value

A vendor management system's ultimate purpose is to obtain the most bang

for your dollars. As a result, properly implementing a vendor management

system can result in long-term savings as well as increased earnings over

time.

Research Locale

The research would be conducted in Baywalk, Barangay Central Mati City,

Davao Oriental.
 Sample Size

Presented in the table are the respondents of the study, the 100 respondents

which are the vendors in the Baywalk, City of Mati, Davao Oriental.

Distribution of Respondents

Name of the Place No. of Respondents

Baywalk, Mati City, Davao Oreintal 100

Research Instrument

This study made use of a downloaded questionnaire that has the content

which was validated and modified. The questionnaire consist of two (2) pages. The

first page of the questionnaire is the vendor’s profile, their name and gender. The

following page consist of the questions that the respondents needs to answers, a

questions which pertaining to the indicators of the study. The respondents instructed

to mark check the column which corresponds to their answers.

Evaluation Scale Descriptive Scale Description

1 Disagree The indicating variable is

not observed

2 Fairly Disagree The indicating variable is

 quite observed

3 Moderately Agree The indicating variable is

observed

4 Strongly Agree The indicating variable is

strongly observed

Data – Gathering Procedure

This study will begin with the formulation of the problem and the identification

of the variables, as outlined in the research paradigm, using the procedures outlined

below for data collection:

Permission to Conduct the Study. The researchers will write a letter to the

vendors in Baywalk, requesting permission to conduct a survey on the vendor

management strategies: its effect on vendors in Baywalk, Mati City, Davao Oriental.

Construction of Questionnaires. The researchers subsequently made the

questionnaires, which are then validated by the panel of experts.

 Distribution of the Questionnaire. The researchers will personally give and

manage the distribution of the questionnaires to the respondents accomplished

answering the questions.

Retrieval of Data. The moment the respondents finished answering the

questionnaire, the researchers immediately retrieved the questionnaire and make

sure that all of the questionnaires are being answered.

Collation, Interpretation, and Analysis of Data. Each questionnaire was

checked by the researchers and the result was collated and tabulated. After the

results was tabulated it was given to the statistician for the statistical treatment and

analysis.

Statistical Treatment of the Data

Guided by a statistician, the following statistical tools will be employed:

Average Weighted Mean (AWM). This tool was used to determine the value

of the extent of management strategies of vendors and the level of sales.

Analysis of Variance (ANOVA). This tool was used to determine the value of

significant difference of the extent of management strategies of vendors and the

level of sales
 Pearson r. this was used to determine the significant relationship between the

extent of management strategies of vendors and the level of sales in Baywalk, Mati

City, Davao Oriental.

REFERENCES

Bhasin, H. (2017). Competitive Pricing-Competitive Pricing Strategy

Retrieve: https://www.marketing91.com/competitive-pricing-competitice-
pricing-strategy/

Gartner, (2014). Vendor Management Key Initiative Overview

Retrieve: https://www.gartner.com/doc/2704522/vendor-management-key-
initaitve-overview

Inman, A. (2017). The Complete Guide to Effective Vendor Management.

Retrieve: https://www.sciencedirect.com/science/article/abs/pii/037722179
390232C

Jobber, D. et. al. (2016). Sales Force Managements.

Publish in Great Britain (2004).

Kotler, P. (2006). Ending the War Between Sales and Marketing.

Retrieve: https://hbr.org/2006/07/ending-the-war-between-sales-and-
marketing
Mckinsey, (2017). Customer service improvement-6 ways you can improve
customer services.
Retrieve: https://www.google.com.ph/amp/s/www.ameyo.com/blog/customer-
service-improvement%3fhs_amp=true

Raineri, S. (2017). Successful Vendor Management Strategies.

Retrieve:https://www.thebalance.com/successful-vendor-management-
strategies-2533806

Steve. et. al. (2007). State-of-the-art in production service-systems vol. 221.

Weitz, B. (2004). European Journal of Operational Research.

QUESTIONNAIRE ON VENODR MANAGEMENT STRATEGIES: IT’S EFFECT ON

VENDORS IN BAYWALK, MATI CITY, DAVAO ORIENTAL

Name (Optional):__________________________________________________

Gender: Male Female

1 – Disagree 3 – Moderately Agree

2 – Fairly Agree 4 – Strongly Agree

 Instructions: Check the box with your corresponding answer.

4 3 2 1

Product/Services

1. The quality of the product/service rendered meets the

expectation of the customer.
2. The management strategically differ from the
competition in terms capabilities of its product.
3. Customer is satisfied with the product they purchase.

Competitive Pricing

1. The price of the product is affordable for all the

customers.
2. Cheaper price is more effective than the other
vendor’s strategy in selling.
3. The price viewed is a substitute for the product
quality.

Improving Excellent Service

1. The management show concerns and desire for

assisting.
2. The management services respond as quickly as
possible.
3. Always listen to the customer very carefully and
understand their needs.
4. The surroundings is clean.

5. The vendors are neat in appearance.

6. The management utilize its people to help in meeting

goals.
Sales
1. Management strategies match the sales management
that have been applied.
2. Sales managers maximize profit for the team while
delivering the best possible quality of the product to
the customers.
3. Sales connote the number of the customers
patronizing the product/services.