Definition
Vendor Management is a way of effectively managing the relationships with vendors and suppliers to meet the needs of the organization, while trying to reduce costs. It involves procuring and looking after contracts along with monitoring their performance routinely.
In the room
How the word shows up in a real conversation.
Jane is a Director of Operations for an expanding eCommerce business. Her job is to take care of all supplier relations & ensure the items they sell are obtained & shipped promptly and cost-effectively.
Jane is facing a great challenge while managing the ever-growing network of vendors. To make this easier, she opted to use a vendor management system. This system helps her keep track of vendor performance, review new vendors and get better deals out of the existing ones.
With the system, Jane is able to streamline vendor processes like ordering and reimbursement. This level of standardization not only eliminates the potential for errors but also improves interactions between both parties.
By introducing a vendor management system, Jane has been able to secure more competitive prices & delivery times from her vendors. She's also quicker to spot & address issues with them, thus streamlining the company's supply chain operations.
Jane's diligence has paid off with increased margins and a boost in the company's profitability. Additionally, the vendor management system has enabled her to shift focus to core operations & growth which have been integral to the success of the business.
In this scenario, vendor management is essential to ensure the success of an organization. A well-structured and effectively implemented vendor management framework can help companies secure advantageous prices & delivery times, minimize risks and strengthen their supply chain process.
Common mistake
Using Vendor Management as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Value-added service
Additional service that enhances the value of a core product or service.
Read definition →
Value-added tax
Tax on the value added to goods and services at each stage of production.
Read definition →
Venture accelerator
Organization that provides intensive support to help startups grow rapidly.
Read definition →
Venture accelerator program
Structured initiative designed to accelerate startup growth and development.
Read definition →
Research more
Open the word in an AI tool with a ready prompt. We do not send your data.
Get one word every week
A 3-minute read: 1 word, 1 founder lesson, 1 tool.