What is the process of vendor management?

Vendor management is made up of strategic activities that organizations use to collaborate and coordinate with vendors. It defines the practices you need to derive the maximum value from a relationship with the vendor.

Begins by identifying the organization’s and project’s goals. Having KPI benchmarks can aid the performance measurement of the supplier greatly, in this case. Then, you’ll have to consolidate a list of suppliers that can let you achieve your objectives.

Classify your selected vendors based on their value. Your high-value vendors may be the fewest in number and not easily replaceable. Similarly, the ones with the lowest value to your company will be many and easily replaceable.

You need to consider all the risk factors associated with these vendors, including their financial health, their location, past reviews, any history of controversial affiliations, etc. Rank and segment your suppliers according to the risks they can pose.

Make sure always to have backup suppliers in mind so that your business continuity does not suffer due to a disruption in the supply chain. Communicate and build relations with your suppliers and grant them visibility into payment processing. Using vendor management software will help you at every stage of the process.