We have previously discussed the benefits of using a vendor management framework to help shape and structure the fundamental building blocks of a vendor management program. Now, we want to break down the first three stages of vendor management, dissect what role each plays in your overall vendor management program and share how Vendor Centric can help you integrate each element within your overall program.
Stage 1: Sourcing
Sourcing is, for many organizations, the first stage in vendor management. It is also one of the most strategic. Sourcing requires an organization to take a holistic view of the common categories of goods and services they buy, and to develop a thoughtful, organized approach for procuring them in a consistent manner across every location and department. The associated activities to sourcing include:
- Analyzing spend
- Defining requirements
- Assessing the vendor marketplace
- Evaluating sourcing options
- Establishing a sourcing strategy and plan
Vendor Centric can help you implement an effective strategic sourcing program by:
- Identifying, engaging, and collaborating with the appropriate stakeholders
- Aggregating, standardizing, and analyzing spend data housed on different documents and in myriad systems
- Designing and implementing category-specific sourcing strategies that align with the size and complexity of your operations
Stage 2: Procurement
Procurement is a function where the true beginning of the vendor relationship forms. It can follow a sourcing strategy (if one is in place), or it can be a stand-alone event that happens when a new need or set of requirements is identified.
Good procurement practices allow an organization to develop clear requirements, solicit from a qualified pool of vendors, and consistently select a vetted vendor who provides the best overall solution. Common activities in procurement include:
- Defining requirements
- Developing the RFP/RFQ
- Identifying qualified vendors
- Managing competitive solicitations
- Evaluating bids and proposals
- Conducting due diligence
- Facilitating the contract process
Vendor Centric can help you implement an efficient and compliant procurement management program by:
- Assessing current procurement activities with a focus on streamlining processes and implementing best practices.
- Clarifying roles and responsibilities in the procurement process
- Evaluating and updating policies and procedures to comply with regulatory requirements.
- Managing new vendor risk assessments and due diligence
- Implementing procurement management software
Stage 3: Contracting
While contracting with vendors is sometimes approached as an afterthought to the procurement process, it is a critical stage in the vendor relationship as it provides for the opportunity to formally document the business relationship you’ll have with your vendor.
A well-developed vendor contract will provide clarity around key terms, performance standards, roles and responsibilities. But most of all, the contract is the most important tool for mitigating risk in the vendor relationship. Key activities include:
- Establishing contract ownership
- Negotiating contractual terms and conditions
- Developing contractual documents
- Executing and setting-up contracts
Vendor Centric can help you implement an effective contract management program by:
- Helping you develop contracting standards
- Clarifying roles and responsibilities in the contract management process
- Developing contract policies, procedures, forms, checklists, and templates
Implementing contract management software
This is the first in a series of blogs about how you can build a vendor management program, and how Vendor Centric can help. Learn more about Vendor Centric’s vendor management framework on our website.