What is Vendor Management? Role, Realities, Processes & Problems related to the job

Vinay Agrrawal
April 19, 2021

What is Vendor Management?

Organisations rely on third-party vendors for various products and services.

  • You might have a specific vendor who sells your company all its office furniture.
  • A vendor who caters meals for your staff.
  • Maybe one that repairs and services all of your IT Equipment.

The practice of managing relationships with these vendors is called as Vendor Management. And the job involves everything from sourcing new vendors to controlling costs, and even driving service excellence.

Vendor Managers perform these tasks so that their organisation can extract greatest value across the deal lifecycle.

What does your typical day as a Vendor Manager look like?

Managing Purchase Requests

You'll receive Requests or Requirements from across your org. IT might want some new computers. And HR might want a new service provider to run background checks in Singapore.

Sourcing Vendors

It's your job to find the company reliable vendors who are offering the latest and greatest services and products.

Onboarding Vendors

Once your company has agreed to go with a specific vendor, its your job to onboard them formally and ensure that they are registered on your system with all the right documents in place.

Negotiating Contracts

After understanding each requirement, you'll be in charge of bargaining for the best price. You'll also have to also setup business goals and ensure that your vendor aligns with them.

Tracking KPIs

Once the deal has been inked, it's up to you to ensure that the vendor is doing a good job. You'll need to set the Key Performance Indicators (KPIs) with your vendor and make sure that he's honouring his promises of quality and performance. We've got a proven KPI template for Vendor Managers over here if you need one.

Managing Escalation and disputes

Is something going wrong? It's your job to ensure that the vendor fixes things and brings everything back on track. And you'll have to ensure the best outcome for your organisation.

Does that sound easy? Unfortunately, there's more to it. And it is incredibly scary.

The greatest fear of all Vendor Managers

What do Vendor Managers fear the most?

A heartless boss? Working on the weekend?

Careless vendors who could ruin their reputation?

A finance team that takes months to clear payments?

Or a company with small budgets and large expectations?

Nope. There is something much scarier: being transformed into a paper pusher.

Good VMs deal with people, bad VMs deal with paper

Do you want climb the ranks quickly?

Lead your own vendor management team?

And be responsible for millions in purchases every year?

Well, that won't happen if you spend your entire day pushing paper.

You need to pick up the skills that matter (and fast)

Vendor Management is an art form. And a great vendor management professional is one who can become a rainmaker for their organisation during a critical situation.

She can harness the power of her connections, management abilities and people skills to do great things during difficult times.

Like being able to quickly supply ten thousand employees with the right equipment so that they can work smoothly from home during a pandemic.

Your focus as a Vendor Manager is to really get better at

  • Making connections with important people
  • Spotting trends in the market
  • Managing projects and large teams with finesse
  • And thinking on your feet

These skills are very hard to pick up. And you need plenty of practice and experience to get good at them. But you will never get good at those things if you spend your time on manual, repetitive tasks all day long.

How to tell if you're moving towards "paper pusher" territory

Unfortunately, many Vendor Managers spend their time doing manual, repetitive work that can hurt their career in the long run. If you spend the bulk of your time on two of these five tasks, you need to be careful.

  • Are you answering a dozen vendor calls per day that are related to trivial issues like delayed payments? Or compliance issues?
  • Do you spend a lot of reminding people to approve things? Or to remind Finance that they should have made that payment weeks ago?
  • Are you spending a lot of time onboarding vendors? Making sure they submit the right documents? And meet the right compliance norms?
  • Are you copy-pasting data between spreadsheets and other apps? Are you always making reports? And updating trackers with fresh data?
  • Do you often spend a lot of time answering emails? And searching for documents or snippets of data within them?

If you answer "Yes" to even one of these questions, then you are spending all your time on manual tasks, which limits your growth.

Special people come with special skills. Here's how you can acquire them

Vendor Management Automation is the answer to these problems. By automating the vast majority of their repetitive tasks, Vendor Managers can start focussing on the work that matters and acquiring those special skills.

Automation will also help them...

  • Speed up purchase cycles for their organisation
  • Speed up payment cycles for their vendors
  • And deliver an amazing buyer experience to their internal customers.

Here is our guide on 6 important automation features that every Vendor Management team needs to implement ASAP.

Bonus: 4 skills that can help you become a VM leader

So now you know what Vendor Management really really is.

Next, if you want to take your VM skillset to the next level, here are 4 skills that you need to pick up ASAP.