Launching a structured vendor management program doesn’t happen overnight. And it can be easy to get overwhelmed with the process. That’s why it’s so important to take a risk-based, phased approach to getting a new program up and running. It allows you to get the basics in place in short order, and get some quick wins under your belt.
When we help a client get a new program up and running, we tackle it in three phases. Phase 1 focuses on getting the fundamentals in place – the building blocks for the program. Phase 2 focuses on getting the program operationalized quickly by focusing on the riskiest vendors first. And Phase 3 provides opportunities to expand and mature the program over time.
Here is an overview of each phase.
Phase 1: Establish Your Foundation
Start by establishing your fundamentals with support from senior leadership. This ensures alignment and the right tone-from-the-top.
- Develop your policy
- Inventory your vendors to determine who’s in scope
- Identify stakeholders and clarify roles and responsibilities
- Create your core assessment tools such as your inherent risk and due diligence questionnaires
Phase 2: Get Traction and Some Quick Wins
With your fundamentals in place, get traction by beginning to assess your most critical and riskiest vendors.
- Risk assess and categorize vendors into risk tiers
- Start conducting due diligence with your highest-risk vendors
- Begin tracking and remediating issues you identify
- Start with some basic monitoring activities around performance, information security, business continuity and financial health.
- Rinse and repeat with the rest of your vendors, starting with the next riskiest group and working your way down
Phase 3: Create a Roadmap to Mature Your Program
Finally, once you are doing the basics consistently, create a path for enhancing and maturing your program. These can include:
- Developing contingency plans for critical vendors
- Identifying and assess 4th parties
- Creating standards for contracting, termination and of‑boarding
- Auditing contracts and consolidate spend with fewer vendors
- Assessing concentration and geographic risk
If you’re committed, you can build your foundation and start managing those high-risk vendors in 90 days or less.
Getting a new program up and running? Download our guide on How to Kick Start your Vendor Management Program. It provides a practical guide for getting your program up and running in as little as 90 days.
Author: Tom Rogers
Job Title: CEO
Organization: Vendor Centric