The Top 4 Ways to Improve Your Vendor Management Process

By: Taylor Short on April 30, 2020

Of the many hassles of supply chain management, one of the biggest headaches is relationship management with third-party vendors.

When your success as a business relies on third parties to help you create or deliver your product, it’s crucial that you’re able to deal with those vendors effectively and efficiently. Even small problems with partners can lead to big problems with your supply chain.

We surveyed several hundred managers in order to understand their biggest headache when it comes to their vendor management program**. We’ll share our results in this report, and provide you with helpful tips on how to manage each of the biggest pain points our survey revealed.**

Here are the tips we’ll cover:

1. Set Realistic Deadlines

2. Express Clear Expectations

3. Minimize Risk

4. Use Software

1. Set Realistic Deadlines

The first thing we wanted to know in our survey was what our respondents found to be their key pain point in long-term relationships with vendors. Despite a fairly even distribution of responses, it became clear that the biggest problem is ensuring that deadlines are met.

Biggest Issue With Outside Vendors


The prevalence of this problem was reinforced by the fact that over 75% of our respondents indicated that vendors “sometimes,” “often,” or “very often” miss deadlines.

How Often Do Outside Vendors Miss Deadlines?


When it comes to your business’ supply chain management (SCM), a missed deadline from one vendor can bring your entire process to a screaming halt. That’s why it’s a very big deal—and the biggest problem for our respondents—when those deadlines aren’t met.

To prevent this problem for your own business, both you and your vendors need to set realistic deadlines, rather than aiming to hit a deadline that might be missed. It will be better for your overall supply chain to set a later deadline that is actually met than to have your entire schedule thrown off by a missed deadline that was set too early.

 TAKEAWAY TIP:  Be realistic when you’re setting deadlines with vendors, and ask that they do the same. Base your schedule abound what is feasible under normal conditions, not what is possible only if everything goes right. If a vendor can’t be honest with you about their capabilities, and they frequently miss deadlines, then find a different vendor.

2. Express Clear Expectations

In addition to understanding how frequently vendors meet deadline expectations, we were also interested in how often they meet quality expectations. A faulty product can hold up production just as much as a dropped deadline, so it’s crucial that your vendors provide you with the high quality they promise you.

According to our results, over two thirds of respondents find that vendors fail to meet expectations either “sometimes,” “often,” or “very often.” As with the question about deadlines, only vendors that “rarely or never” fail to meet expectations are acceptable here, but less than a third of respondents found that to be the case.

How Often Do Outside Vendors Fail to Meet Quality Expectations?


Clearly, you need your vendors to live up to the expectations you set for them, and lowering your expectations isn’t an option. Instead, as with deadlines, you need to be clear with your vendors about what you’re expecting from them, and you need to insist upon absolute honesty from them about what they can provide.

 TAKEAWAY TIP:  Be consistent and clear when you describe to your vendors the quality of the product that you expect. Ask to examine samples, and get them to guarantee in writing that what they provide will live up to your expectations or you will get your money back. If they fail to deliver, find a different vendor.

3. Minimize Risk

Third-party risk management is an important factor when it comes to dealing with vendors, especially as a result of recent federal regulations and guidance about the liability a company assumes when contracting a third-party vendor. Because of increasing worry on the part of the public about cybersecurity and data breaches, this sort of risk management is particularly important these days.

Businesses, however, don’t seem to be taking this concern as seriously as they should. According to our survey results, the majority of respondents are “minimally concerned,” and only around 40% are either “moderately concerned” or “very concerned” about outside vendor risk management.

How Concerned Are You With Outside Vendor Risk Management?


If you’re not at least moderately concerned about outside vendor risk management, then you’re not taking the problem seriously enough. If your customers find their data at risk because of a vendor you’ve subcontracted to, then it’s your business that will be on the line.

Instead of just hoping for the best, you need to mitigate risk whenever you enter into an agreement with an outside vendor. Require your vendors to explain what data they’ll require access to and how exactly they’ll protect that data from exposure, and make sure they live up to a reasonable level of security before you discuss contract terms with them.

 TAKEAWAY TIP:  Approach issues of security aggressively and proactively, and extend that level of concern to all the outside vendors with whom you contract. Require that any vendors you’re considering working with answer a detailed set of questions about potential security issues to aid your decision-making process.

4. Use Software

So far, all of the tips we’ve mentioned have related to communication between yourself and your vendors. Essentially, the clearer and more consistent your communication is, the better off your relationship will be—and vendor management software makes communication clearest.



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An example of a suppliers management page in vendor management system Gatekeeper

Vendor management software can help you implement each of our previous tips in the following ways:

  • Maintain a calendar accessible by all parties. When both you and your vendors can access the same calendar and keep it regularly updated, you will always be on the same page about deadlines.

  • Centralize communication. Vendor management software will provide a central platform where every party involved in a transaction can discuss expectations and setbacks, leading to greater transparency and satisfaction.

  • Create detailed vendor questionnaires. You can make these questionnaires a requirement in your process, so that when you source and select potential vendors you will always have full information about their company and their security precautions in order to minimize risk.

All of this to say: we were quite surprised to find that only 8% of our respondents use vendor management software to work with their outside vendors.

How Do You Communicate With Outside Vendors?


In short, software can help you create a smoother vendor management process for your business and the vendors with which you’ve partnered. Its general contact management and task management tool-set will help you create stronger relationships that will ensure you don’t have any any breaks in your supply chain.

 TAKEAWAY TIP:  Take a look at the vendor management software options available to you and do a cost-benefit analysis of how helpful it will be for your business. If you think the many tools provided by the software will help you to create a better vendor management process that leads to fewer problems and happier customers, then you’d be wise to purchase a system that fits your business’ needs.

Improve your vendor management now

As should be clear by now, vendor management software will help you implement each of these tips to facilitate a smoother vendor management process. Here are some next steps to take as you consider whether or not it’s worthwhile for your company to take the plunge and purchase that software:

  • Read user reviews of vendor management software to see how other businesses have used these systems to help improve their own supply chain management.

  • Schedule a phone call with our software advisors to find the right vendor management system for your specific needs.