We often look at our business relationships as pillars of strength and support to be successful. This is particularly true with vendors because relationships are long-term; where you trust the goods or service they provide, and the people behind it. You know your values align and they have your company’s best interest at heart.
But picking referred or unknown vendors means that we take on a significant risk if it’s a new relationship. You might be unsure of the person or organization’s performance and how they will work with your team.
Or, even a previous vendor carries a certain risk because of their past history, rate expectations, or recent project outcomes. Working alongside numerous contractors and providers requires a greater trust to deliver a high degree of quality with each project, especially in construction.
It’s difficult to avoid negative results if you choose the wrong vendor or miss certain red flags over time. But mistakes are expensive for your company and it can damage client relationships, project success, and your reputation.
These type of decisions can weigh heavily when it feels like there’s a lot at stake. Do you dive in or take baby steps to find the right fit? Despite the pressure, it’s an opportunity to choose wisely so projects are completed seamlessly and it can be a business experience you’ll want again.
Do you take the risk?
Data-Driven Decisions to Mitigate Risk
Risk is expected in business, no matter what industry you’re in. Sometimes it’s about listening to your intuition because it’s arguably one of the best guides to navigate through business decisions. Your gut isn’t always right though. You need something a bit more sound and tangible to qualify those decisions.
At 4castplus, we know and trust in metrics that provide definitive and quantified information to help you make the tough decisions that drive your business. There are ways to mitigate risk and to make risk-informed strategic choices. The measurables that our procurement management software offers can validate your intuition on the best vendors for the project.
The Winning Formula
Our software gives you the tools to assess the risk with multiple variables and make data-driven decisions. You can have a look at planned versus actual subcontractor performance and provide real-time indicators of potential productivity issues. One of the most popular features is its ability to gather historical performance metrics on vendors. What does that include? Everything and anything that a vendor can be tracked for. This includes costs, shipments, communication, milestones, requests and more. The software captures a 360 degree view of each vendor. You have the ability to rank, compare, and evaluate every vendor to ensure the best ones are chosen for future projects.
You are in a far better position to pick the winning vendors out of a crowded market if you know what to look for and how to use procurement solutions effectively. Simply, find the vendors that are the best fit for the company and project. Some primary characteristics we look for include:
- competitive edge, and
These characteristics are expected but often overlooked without the right tools in place to help you make data-driven decisions and assess the risk. And taking small steps that align with your strategy to pick the top vendors means you can limit your own reputational risks and successfully lead the team.
Higher-ups, investors, and shareholders will evaluate your choice of winners, but the data will help validate your reasoning. You’ve set the company up with the best people, systems, project management software and controls to make sure you end up on top. And there’s comfort in that thought.
“Predictive analytics moves beyond what your data is telling you about your current performance by using machine-learning and trend analysis to forecast performance going forward and automatically flag potential risks before they have the chance to materialize.” Cameron, Journal of Commerce, 2022.
Risks are not equal; each decision you make has different outcomes that can impact your project or business. But, it’s important to take calculated risks with a data-driven approach that can help you reduce losses ultimately because you’ve weighed more than the pros and cons. It becomes worth it to take a chance for the future of your business and reputation.