What is the Vendor Management Lifecycle in GRC?Published March 7, 2020 • 2 min read
The vendor management lifecycle is the end-to-end approach that organizations use to manage external vendors in an organized and transparent manner.
Because market conditions and technologies are constantly changing, organizations have to completely redo their traditional vendor management processes to save money and reduce risks.
The vendor management lifecycle allows companies to acknowledge the importance of their vendors and incorporate them into their procurement strategies. Companies that have strong vendor relationships are better able to manage their supply chains.
Typically, the vendor management lifecycle consists of:
- Vendor identification: shortlisting potential vendors
- Vendor selection: determining if a particular vendor is able to deliver the necessary goods or services
- Vendor segmentation: classifying each shortlisted vendor according to certain metrics, including lifecycle cost, availability, quality of goods or services, and support
- Vendor onboarding: gathering all the documents and data necessary to add a vendor to the approved vendor list
- Vendor performance management: analyzing and measuring how a vendor performs throughout the contract to track and eliminate vendor risks
- Vendor information management: collecting data from each step in the vendor lifecycle from onboarding to offboarding
- Vendor risk management: identifying, analyzing, and mitigating vendor risks
- Vendor relationship management: identifying the key vendors and cultivating long-term relationships with them
- Vendor contract management: handling all aspects of vendor agreements from start to finish
- Vendor offboarding: removing a vendor from finance and administrative records after the end of a vendor contract or vendor relationship.
Technology is a key part of the vendor management lifecycle as organizations can do more with less by implementing automation. To remain competitive and get more out of vendor relationships, companies must adopt new technologies to streamline their vendor lifecycle management processes.
A vendor management solution enables organizations to improve the vendor relationship throughout the vendor management lifecycle, helping them to reduce risks and save money.
An automated vendor management lifecycle process helps companies operate more efficiently. Automating the vendor management lifecycle enables organizations to build better vendor relationships by improving engagement and transparency and reducing risks.
A complete vendor management solution helps organizations deal with standard procurement challenges and also accommodates unique business processes, use cases, and policies. An ideal vendor management system helps companies carry out their unique business goals and procurement needs.