The last few months, customers have frequently asked, “How do you define what a vendor is?”. It seems like a straightforward question but can start quite the conversation. As simple as it sounds, many organizations have struggled with looking for a baseline to build policies and procedures around for their vendor management program.
There are a few different methodologies or thought processes I would like to share based on how I have seen customers analyze their vendor definition and criteria for adding them to their vendor management program.
- Clearly Define What a Vendor Is.
For some, the definition of a vendor includes anyone you have an ongoing relationship with and a contract exists for the relationship. If they do not fit this definition, then they would not be included in the vendor management program as a vendor.
- Create Categories.
Some organizations have worked to define specific categories to organize vendors. Depending on the category that the vendor falls into they may or may not qualify to be placed into the vendor management program. Some of the categories that would be exempt may include nonprofits, government agencies, building leases, charities or sponsorships, subscriptions, capital expenditures, etc. Due to the low level of information sharing and operational impact, they are often filtered out of the program and exempt from being included in the vendor management process.
- Vendor Manager Surveys.
Other vendor management admins have created surveys for their business unit owners to complete to help them determine if they should be in the vendor management program. When creating a survey or workflow, it is important to make it simple and straightforward so the user can easily and quickly answer the question. Create questions for the business unit manager to answer that would help them think through the thought process of whether they should be added to the vendor management program or not.
In the end, no matter how you determine what qualifies a vendor what should be in your vendor management program should be clearly defined and a process needs to be established. Without a good process in place, you will soon be going through the entire daunting due diligence process on the neighborhood pizza place that catered your last work party.