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How Strong is Your Vendor Management Function?
Posted by Hélène Pielmeier on December 2, 2015  in the following blogs: Translation and Localization, Best Practices
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Many language service providers use their ISO 17100 certification (formerly EN 15038) to bolster claims of process strength when it comes to supply chain management. In CSA Research’s recent interviews on vendor management at LSPs, we found wide variations in terms of organizational maturity of the function – regardless of certifications. How companies organize vendor management affects their growth, profitability, and even the business valuation calculated by investors.

The main purpose of vendor management is to enable project managers to assign resources with the correct expertise, tools, and availability to a project – all that within the desired rates. The technology that underpins the function directly affects that capability.

At first, owner-operators usually handle vendor recruitment. Then, they pass the function to project managers. Eventually, a growing client and vendor base exerts a steady pressure that causes LSPs to formalize the function. As they grow and mature, language service providers find themselves with large dispersed VM teams that support a variety of strategic goals.

Besides building a strong repository, LSPs eventually build vendor self-registration portals that automatically feed their databases with applicants. The most mature vendors even deploy artificial intelligence to automatically select the best vendor for a project and smart predictive models to assist with capacity planning.

Effective vendor management also requires strategic thinking and efficient process design to respond to the life cycle phases of building vendor relationships. This is where we found the most differences among suppliers. Some LSPs choose to always be prepared with an abundance of resources ready to go in their database while others rely on last-minute or just-in-time recruitment. As a result, some use translation tests to vet linguists while others choose to evaluate the skills on live projects for clients.

Regardless of the approach, it’s the strength of the processes surrounding these decisions that makes some LSPs stand out. For example, weaker providers tend to have subpar processes to evaluate partner agencies they work with and don’t train their reviewers on elements to inspect when evaluation translation tests. In contrast, as the vendor management team gains more expertise, LSPs eventually exercise tighter cost control through rate negotiations and closer performance management with ongoing feedback systems.

Proactive vendor management enables language service providers to position the company for growth without slowing down due to resource gaps. Dedicated vendor managers also increase the production capacity of project managers and lead to a decrease in turnaround time to assign vendors to jobs. Thanks to tighter process control, VMs also prevent the company from regressing due to selecting the wrong resources to work on projects.

But its role doesn’t stop there. Most languages show a strong base of raw talent ready to be trained up as needed to produce professional-level work. LSPs must also take a proactive role in developing this raw talent to build the supply chain of the future and avoid talent gaps. Forward-looking LSPs embrace this human capital development through various training programs and internship opportunities.

In the end, the main shortage is that of fully trained talent at very low rates. That reality leads to the discussion about pricing strategies. CSA Research is currently conducting research on how LSPs quote projects. Please contact us if you are interested in participating.


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