Vendor management is a proactive, holistic, and strategic approach to interacting with vendors from cradle to grave (i.e. onboarding through offboarding). It comprises five main Towers of Excellence with each Tower comprising unique processes that are complementary to the other Towers. In addition, vendor management exists as a spectrum: at one end you will find formal, well-staffed, and robust vendor management offices (VMOs), and at the other end you will find a part-time person using some vendor management practices, tools, and/or templates to improve their exchanges with their important vendors.
In talking to our members, it became readily apparent that many organizations live (or want to live) somewhere between the two extremes of the spectrum. Initial discussions about VMOs were met with head shaking, hand wringing, and exasperation. For that reason, we needed a new term to explain vendor management – the term VMO repelled people rather than attracting them. We decided on the term vendor management initiative (VMI) as a way of getting people to understand that their desire to implement some vendor management leading/best practices could live on the spectrum (and be successful) without having to invest in a robust VMO. To date, people have been receptive to the new term, and they have begun to embrace vendor management as a result. By now, you have probably figured out a few things:
- Vendor management can mean a lot of different things based on who you talk to and what that person’s goals are.
- Vendor management is too broad to be defined simply.
- Vendor management is highly customizable or configurable depending upon an organization’s needs and desires.
Vendor management is the unifying foundation for five main Towers of Excellence. While it is not necessary to incorporate all of these Towers, the more elements and Towers present in a VMI, the more strategic and impactful it can become.
Explore each Tower of Excellence in greater detail: Download Research