What is the Vendor Management Process?

The vendor management process is an integral part of the procurement system that saves time and effort in validating multiple Vendors, reduce vendor set up cost & lengthy documentation process, etc. by examining, segmenting, and managing the vendors. The vendor management process enhances the way a company commute and cooperates with the vendors. A vendor management system is based on the particular business requirements of a company and the value it needs to extract out of the relationship.

Vendor Management Process

Vendor Management Process flow:

The vendor management process flow means the process of creating/implementing effective vendor relations. Here are the four steps involved in the process:

1. Segmentation: At this stage of the Vendor Management Process, firstly you need to classify vendors based on various metrics such as profitability, the volume of transactions, performance, and quality of products. 
2. Collaboration: Vendor management practices mainly focuses on a price adjustment. To unravel more value from a relationship, buyers have to broaden their focus. Working together with their vendors, companies can take costs and risks out of the bottom line while pouring value and innovation.
3. Implementation: Companies can efficiently implement their vendor management process by beating into supplier/vendors competences to generate mutual value. Vendors/ Suppliers and buyers can involve in happenings such as cost optimization, relationship building, quality management, risk management, innovation, etc. 
4. Evaluation: The last stage of the VMS process is about analyzing & evaluating the performance to check the entire Vendor Management activities. Use your development plan to check the progress with the specific set of targets.

The vendor management process assists the business with the goals viz:

• Evaluating vendors capabilities comprising of overall quality of goods and services, turnaround times, pricing, payment confirmation, and Contract negotiation
• Effective Vendor long-term relationship management
• Receiving Internal assignments
• Ongoing performance assessment via regular check-ins