Working with vendors in today’s environment is unavoidable. In order for you and your staff to do what you do best—serve your members—sometimes that requires partnering with third-party providers in order to:
- Provide the technology you need to operate efficiently
- Offer your members the products and services they need to meet their goals and protect their assets
- Reduce your credit union’s risk
Depending on the number of vendors you have (or need), the vendor management process can be daunting, particularly when it comes to managing your credit union’s risk. The number of partners required to manage all aspects of your auto loan portfolio can be extensive. It can require service providers to assist with collections, insurance tracking and placement, skip tracing, repossession, and remarketing. It can be tedious to manage each of these relationships and ensure that the partnership is valuable to both you and your members.
Since working with vendors is inevitable, it’s important to seek out partnerships that are best suited for your credit union and member base, and maximize those relationships to accomplish as many of your objectives as possible.
Seek out industry leaders
There’s rarely a product or service provider in the market that has a monopoly on their service, so chances are, whatever your need, there are multiple vendors that can offer you a solution. Start by identifying three products and/or services that you currently outsource to a third party. Then ask yourself if you know the three most reputable vendors for those products/services. Do you have an existing relationship with their sales staff, leadership, or other employees? If not, you and your members could be missing out on a potential mutually beneficial relationship.
During the course of any year, services get enhanced, new products are released, pricing changes for a variety of reasons, and regulations change—making older-generation products obsolete or non-compliant. Without your knowing, the entire industry could be using (or switching over to) a better product or service from your vendor’s competitor, costing you potential business because you’re lagging behind.
Knowing what you have and what you don’t have is key to your success, and the best way to find that out is by keeping in touch with your vendors. Invite the leadership teams from your selected vendors in for a visit at least once every six months. Explain how your credit union is performing, what needs you have, and ask for their recommendations. Also, ask about any enhancements or new products they have in the works, what offerings seem to be the most popular and seem to be showing momentum in the market. Industry leaders are constantly improving their products and services and looking for “the next best thing” to stay competitive—and your credit union should benefit from relationships with the most innovative and forward-thinking vendors.
What can they do for you?
Ask yourself: “What do you get by offering your members [X product] from [X vendor]?” Most credit unions are looking to provide their members with a product or service that they need and potentially collect income and deepen the relationship as a byproduct. But, in today’s competitive market, overflowing with industry disruptors, you could be selling yourself—and your members—short.
Quality vendors will include training, robust reporting, software, core integrations, market intelligence, and other related products and services to ensure they are meeting and exceeding your need. Think of it this way: if you went in to buy a new car, and the salesperson tried to sell you one with air conditioning, hands-free phone capabilities, navigation, etc. You might think, “I only need a car to get me from A to point B.” But, once you buy the car, you realize how important the air conditioning, hands-free capabilities, and navigation are to the driving experience.
One neck to choke
It can be time consuming to oversee and communicate with all of your vendors—especially if you require multiple vendors to manage the same function. Software products, in particular, have regular enhancements, updates, and changes, and having a close relationship with vendors and providers ensures that you’re notified and kept up-to-date. If you’ve done a recent audit of your vendors, perhaps you noticed a growing list with some functionality crossover. One thing you may consider is the possibility of condensing your number of partners. We all know in the risk-management business, we have skip tracers, repossession agents, remarketers, outsourced collection agents, so on and so forth. It can be arduous to keep tabs on all the different vendors required to keep your risk-management operation running. Having fewer vendor relationships to manage is one of the biggest benefits of condensing your number of partners to work with an organization that can provide a holistic solution.
When you work with one vendor for a group of services, it essentially ups the stakes and adds pressure on them to meet your credit union’s needs. It can also simplify your third-party oversight process. And, from a vendor management standpoint, one vendor or partner means you only have one neck to choke!
An effective vendor management process is one vital tool in your risk management tool kit. Learn about the other components that should be included in your risk management program in our latest ebook, The Right Tools for Risk Management.