What is Vendor Management?

What is vendor management?

Vendor management is the multi-stage process of initiating and developing relationships with providers of goods and services that a purchasing company (“the buyer”) needs for day-to-day operations and the fulfillment of its mission. From the buyer’s perspective, primary stages of vendor relationship management include:

Vendor selection: Using an up-to-date risk profile and qualifying and segmenting based on category, location, and business unit
Risk assessment: Performing risk due diligence based on the nature of your vendor engagement
Contract negotiation: Establishing terms and risk KPIs
Onboarding: With understanding of risk assessment and audit status
Managing performance and monitoring/mitigating risk: Utilizing a matrix-based, single view of vendor and a data-driven incident model

Reduce your risks and make faster, smarter decisions by integrating vendor management with procurement processes and a supplier network.

Vendor or supplier?

The term vendor is sometimes used interchangeably with supplier. Some types of companies are more apt to use one over the other. Whichever they’re called, many enterprises work with thousands of vendors linked together in supply chains stretched around the globe.

This makes it difficult for companies to know everything they need to about their vendors and monitor their performance. It’s even more difficult to know about the vendors their vendors work with, and the ones they work with, and so on down the line.

What’s more, as enterprises extend global operations and work with vendors around the world, vendor data is often kept locally, in spreadsheets or on individual hard drives. It quickly becomes an outdated- and manual system for vendor information management.

The lack of visibility into vendor information and vendor performance increases a company’s supply risk, and impedes the ability to act quickly when dire situations arise – like a natural disaster, product recall, or ethics violations. It also makes it difficult for employees to know which vendors they are supposed to buy from.

Digitize and automate vendor management

Vendor management best practices call for implementing cloud-based vendor management software, integrated with procurement processes. The best vendor management software can:

Equip vendors to manage company information themselves with simple tools that keep your vendor master data current

Make vendor master data, maintained in the cloud, accessible from anywhere in the world

Provide a unified, 360° view of each vendor, combining vendor information, qualification, segmentation, performance, spend, and risk data in one place

Enable a vendor management framework that drives spend to preferred vendors

Syndicate real-time information for better vendor risk management through fast, informed decisions that prevent supply disruption

Instill confidence that selected vendors can deliver high-quality goods and services on a sustained basis

SAP Ariba Solutions for Vendor Management

Supplier Management

SAP Ariba provides the only end-to-end solution portfolio that lets you manage supplier information, lifecycle, performance, and risk all in one place.

Learn more

Supplier Lifecycle Management

SAP Ariba's supplier lifecycle management solution is integrated with procurement processes to help you drive spend to preferred suppliers and scale compliance for your entire supply base.

Learn more

SAP Ariba Supplier Risk

SAP Ariba Supplier Risk helps your buyers make smart, safe decisions in selecting your third-party relationships.

Learn more

Vendor Relationship Management