Vendor Relationship Management
Vendor Relationship Management, also known by its acronym VRM, proves to be the inverse of Customer Relationship Management. Where CRM attempts to understand the complete needs of the customer, VRM operates under the goal of outlining the technologies, tools, and services that enable the customers to manage vendor relationships. Those vendors who work with these technologies, tools, and services gain the ability to develop superior relationships with their customers.
Vendor Relationship Management has emerged to become a competitor with Customer Relationship Management because of an inherent structural problem with the concept of Customer Relationship Management. The inherent problem lies in the fact that no organization is able to construct a fully comprehensive view of their customers. With Herculean efforts, some companies are able to construct a full view of their relationship with the customers, yet despite this fact, the companies will not have a fully unobstructed view of the numerous additional supply side relationships in which the customers commonly are involved. It would not be a stretch for there to be a hundred or more such vendor relationships for a given customer. The fact remains that only an individual who is provided with the necessary access to processes and tools would be able to develop something resembling an entire view of their supply requirements.
All that said, the end goal of vendor relationship management focuses on bettering the relationship between the supply side and demand side of various markets through showcasing superior and new means for the supply side to interrelate with the demand side. In the grand scheme of the cosmos, vendor relationship management is able to improve markets and their accompanying mechanisms via outfitting the customers as stand alone leaders and not simply held captive followers where their relationships to vendors and various additional supply side parties are concerned.
Vendor relationship management accepts a number of core concepts governing the idea. These are listed below, as follows:
- Vendor Relationship Management tools prove to be tools to help the customers. The customer drives these, not vendors themselves. Also, such tools do not operate within the purvey of only a single vendor’s environment.
- Vendor Relationship Management offers the customer tools to be able to manage their vendor relationships. Such tools turn out to be personal, although they may also be social secondarily.
- Vendor Relationship Management tools are interrelated. They are able to work with vendors’ systems in methods that help both sides of the relationship out.
- Customers become the main integration points for their personal data as a result of Vendor Relationship Management.
- Vendor Relationship Management tools do more than just improve the relationship with customers, they also support customer conversation and transaction.
- Customers are able to manage their own data using Vendor Relationship Management. Since they decide which information to share, they also determine the conditions under which the information is shared with various vendors.
- Customers are able to hold an unlimited amount and variety of types of data. They can decide to share whatever amount of this information that they want to with vendors that they so choose.
- Customers are able to initiate numerous actions using Vendor Relationship Management. Included in these are all of the following: requests for memberships, preferences, services, products, terms of service, and transaction histories.
- Open API’s, open standards, and open codes are the hallmarks of Vendor Relationship Management.
- Customers and meaningful vendor and customer relationships become the basis for various types of businesses using the concept of Vendor Relationship Management.
In order for the process of Vendor Relationship Management to be effective, the vendors have to buy into the concept and also value it. On top of this requirement, customers must be motivated to put in the required effort, time, and focus on ensuring that it works out well. Working through this exact difficulty is the main challenge for Vendor Relationship Management. To affect VRM, the supports of the Vendor Relationship Management in question have to be demonstrated as a beyond any doubt winning situation for both vendors and customers. Otherwise, Vendor Relationship Management turns out to be a victim of the same pitfalls from which Customer Relationship Management suffers. In other words, Vendor Relationship Management is a two way street that both parties, the customer and the vendor, must walk down together, at the same time.
Vendor Relationship Management is undergoing continuous development and improvement at the behest of various interested organizations and institutions. Harvard University’s Internet and Society Berkman Center constantly works to encourage and support the needed development of Vendor Relationship Management methods and tools. They do this with the goal of helping customers to gain true independence from the vendors, and to show them the means of interacting with vendors. Berkman Center fellow Doc Searls heads up the progressive project presently.