what is vendor management

Vendor management is the process of initiating, developing, and maintaining relationships with suppliers, also known as supplier management. It includes activities such as selecting vendors, negotiating contracts, controlling costs, reducing vendor-related risks, and ensuring service excellence. Vendor management enables organizations to control costs, drive service excellence, mitigate risks, and gain increased value from their vendors throughout the deal life cycle. It is important for selecting the right vendor for a particular business need, achieving business goals, harnessing opportunities for cost savings, and speeding up the onboarding process. Additionally, effective vendor management helps reduce the risk of supply chain disruption, ensures timely delivery of goods and services, and builds stronger relationships with vendors, potentially leading to opportunities to negotiate better rates. Furthermore, vendor management can refer to online tools that keep all vendor information and related activities in one place for the organization’s reference, such as vendor management or supplier management software.