How to Manage Your Vendor Lifecycle like a Pro?

Shivasankari Bhuvaneswaran

February 6th, 2019 Procurement Process   Vendor Management  

Vendor performance has a huge impact on an organization’s success. Quite often, organizations use it as a benchmark to evaluate the efficiency of the procurement process and its role in the business’s success.

A vendor who offers excellent goods and service will continue to deliver value regardless of your vendor management process or purchasing contract. At the same time, a comprehensive contract or a brilliant sourcing strategy will do nothing if the vendor fails to fulfill the expectations.

vendor lifecycle management

When your vendors are so integrated into your business, even supply chain risks that are caused by compliance issues can impact your brand’s image and reputation. So, unless you want your organization’s image in tatters, procurement teams need to focus on not just choosing the best vendors but managing them consistently throughout their lifecycle.

Here’s everything you need to know to manage your vendors like a pro.

What Is Vendor Lifecycle Management?

Vendor lifecycle management is defined as the cradle-to-grave approach of managing vendors in a transparent and structured way. Vendor lifecycle management places an organization’s vendors at the heart of its procurement process by recognizing their importance and integrating them in the procurement strategy.

It describes a set of eight activities that cover all aspects of dealing with vendors throughout their lifecycle:

  • Initial identification and engagement
  • Vendor qualification and risk mitigation
  • Evaluation and selection
  • Vendor onboarding and information management
  • Performance management
  • Supply risk management
  • Vendor relationship management
  • Vendor offboarding

3 Phases of Vendor Lifecycle Management

The eight steps involved in vendor lifecycle management can be split into three main phases.

1. Pre-Contract Phase

The first phase of vendor lifecycle management starts with the process of need identification and solicitation. Solicitation is the process of informing potential vendors about an organization’s need to acquire specific goods or services.

Documents like requests for proposals (RFPs) and invitation to bid (ITB) are used to give all vendors a level playing field. Once the proposals are received, they are registered, stored, opened, and analyzed by authorized procurement officers to ensure transparency and confidentiality.

A handful of vendors are shortlisted based on the offers and moved to the qualification stage. In the qualification stage, the shortlisted vendors are put through a robust due diligence process where they provide a defined set of confidential information about their business.

The obtained information is then cross-checked to verify a supplier’s stability and health. Organizations around the world use one or a combination of the methods listed to below to evaluate whether or not a vendor is eligible for a contract award:

  • Lowest price
  • Technical responsiveness
  • Compliant offer
  • Weighted scoring (a combination of cost and quality)

2. Contract Phase

Once a vendor is selected for the contract, he/she undergoes a vendor onboarding process. In this stage, a vendor profile is created by gathering robust multi-dimensional data from vendors. This information is then stored securely and shared with all stakeholders who have a vested interest in the procurement process.

Vendor information management happens to be a key subset of vendor lifecycle management and the contractual phase, stretching from the initial contact with a potential vendor through to the strategic vendor relationship management and the end of a vendor relationship.

It also covers the aspects of risk management, ongoing contract performance monitoring, and more. Another important subset of the contractual phase is vendor performance management. Keeping a close eye on a vendor’s performance can help organizations uncover risky situations.

Every active vendor is continuously monitored and evaluated for changes in behavior or product quality. Being aware of potential changes in a vendor’s performance can reduce the chances for an unexpected or risky supply chain disruption.

3. Post-Contract

Post-contract close out initiatives are pretty straightforward for low-value vendor contracts. However, if it is a complex, high-value purchasing contract, the vendor offboarding process is anything but simple.

To ensure that a vendor is offboarded properly, the procurement officers need to make sure that all contractual obligations have been fulfilled and verify if there are any residual obligations, like warranties, after sales service/support are involved.

In case of any residual obligation, responsibility, liability, procedures involved, and other terms need clearly defined and fulfilled by the supplier. If everything seems to be in order, then a vendor can be offboarded with the help of a vendor offboarding checklist. Vendor offboarding brings the vendor lifecycle management process to a full cycle.

Automate Your Vendor Management Process in 15 Minutes

Used by Pepsi, Motorola, Domino's and 10,000+ Businesses. No coding required.

How to Improve Your Vendor Lifecycle Management Process With Automation

Automation helps organizations create a frictionless purchasing experience between buyers and suppliers across the end-to-end vendor lifecycle management. With an automated vendor management solution, organizations can collaborate easily with their vendors, make informed business decisions, and monitor vendor performance effortlessly.

A good vendor management solution offers corporate buyers a comprehensive set of tools to qualify, evaluate, onboard, measure, monitor, and manage the vendor lifecycle more effectively. Vendor management tools of today integrate seamlessly into your existing procurement process and let you derive more value out of your vendor relationships while remaining compliant.

An automated vendor lifecycle management process:

  • Ensures regulatory compliance
  • Improves transparency
  • Curbs supply-related risks
  • Established consistency
  • Monitors performance actively
  • Offers better insights
  • Improves collaboration

Summary

Vendor lifecycle management binds together all the elements of a vendor relationship to improve the efficiency of the procurement process and mitigate risks. The whole cycle from initial engagement to sourcing and relationship management to the final parting of ways can be made easier with the help of end-to-end vendor management solutions.

Automated vendor management solutions like KiSSFLOW allow organizations to dig deeper into spend analytics, enforce compliance policies, spot potential red flags, and extract more value out of their key strategic vendors.

Whether you are starting from scratch or planning to implement vendor lifecycle management on top of your existing processes, KiSSFLOW is a good place to start. Sign up for a free trial and see how KiSSFLOW can make your vendor management process seamless and swift.

Automate Your Vendor Management Process in 15 Minutes

Used by Pepsi, Motorola, Domino's and 10,000+ Businesses. No coding required.