A Better Way to Manage Vendor Relationships
An effective vendor management program ensures critical activities are cohesively managed across all stages of the vendor relationship.
Vendor Centric's Vendor Management Framework provides an easy to follow blueprint for creating a sound, effective vendor management program. It ensures that risks, costs and compliance are managed across all six stages of the vendor relationship, and provides structure for getting the right people, processes and systems in place to make it all work.
Here's how the components all fit together.
At the core of our vendor management framework are the six stages that define the lifecycle of the vendor relationship.
While each stage is important on its own, a well-designed vendor management program must incorporate all six stages to ensure activities and stakeholders are aligned to cohesively manage vendor risk, costs, performance and compliance.
The sourcing stage focuses on finding the right sourcing strategy for company-wide goods and services that need to be procured. It includes analyzing spend, defining sourcing requirements, and evaluating options such as build vs. buy, vendor consolidation, outsourcing and shared services.
The contracting stage ensures a standard process is in place to formally document the business relationship with the vendor, and to ensure contractual clauses are in place to define performance expectations and mitigate risk.
The purchase-to-pay stage encompasses the daily activities necessary to acquire goods and services, review and approve invoices and get vendors paid in both a timely and efficient way. It is most effective when it ensures compliance with sourcing, procurement and contracting.
The procurement stage allows for a process to find and select the best goods and services and the right vendor relationship. It includes activities necessary to develop requirements, identify qualified vendors, conduct solicitations and perform risk assessments and pre-contract due diligence.
Just like onboarding a new employee, the vendor onboarding stage gets the relationship moving in the right direction. It allows you to assign clear ownership for managing the vendor contract, and begin integrating the vendor into your operations.
OVERSIGHT AND OPTIMIZATION
This is the final stage in the lifecycle, yet the one where the rubber hits the road. It's where your vendors execute on their contracts, and your staff ensure those vendors are delivering on what they promised while costs, compliance and risk are all being continually managed.
The Engine: People, Processes and Systems
Getting all six stages to work together requires the vendor management program be built on a solid foundation of people, processes and systems. These are the five components that make a vendor management program run efficiently and effectively.
Establishes ownership and oversight for the vendor management program.
Identifies and aligns the various people involved at each stage of the vendor relationship.
POLICIES AND PROCEDURES
Establishes standards and clarifies day-to-day roles and responsibilities for vendor management.
Integrates necessary systems, forms and tools required to perform activities into operations.
Defines key metrics and ensures collection of data and continual visibility into the process.