How to determine your Vendor Management Maturity?

Vendor Management is a complex process with a wide variety of responsibilities – and the maturity of your Vendor Management has a huge impact on how you execute your tasks and generate benefits.

There are so many different aspects around Vendor Management – from supplier relationship management, reporting, performance measurement to contract management, purchasing, and price comparisons and negotiation – that the criticality of the maturity can hardly be underestimated.

But let`s begin with the basics:

Why is a structured and mature Vendor Management important?

• Especially within IT, a huge portion of annual budgets are spent on vendor services.
• External service provision can be efficient and effective – resulting in saving money. But it needs to be monitored, steered, and executed with a strategy.
• Using vendors is a trade-off between risks and savings – to keep the first under control and benefit from the second.
• It plays a key role when transforming a fragmented vendor landscape to a key supplier strategy.

What prevents companies from setting up a mature Vendor Management organization?

• Vendor Management needs a structure of resources, processes, guidelines, and a strategy – it is not a short-term initiative.
• Often, there is no clear focus on managing relationships and cooperation with vendors – the spotlight is on cheap purchasing, not on long term benefits, efficiencies and capabilities.
• To allow Vendor Management to contribute to the long-term success, it needs to play a central role together with operational teams, purchasing, legal, and finance – guided by a strategy, shaped by a vision.

Which benefits does a mature Vendor Management organization offer?

• Generating of savings
• Enhancing business capabilities
• Bundling purchasing power
• Streamlining relationships
• Reducing the number of vendors
• Mitigating risks
• Benchmarking and challenging suppliers
• Leveraging from supplier expertise
• Identifying best fitting vendors for specific areas

What are critical and key capabilities of a mature Vendor Management?

• Supplier Onboarding
• Transition Support
• Supplier Performance Management
• Supplier Assessments
• Supplier Audits
• Financial Management and Savings Monitoring
• Supplier Relationship Management
• Termination Support
• Supplier Risk Management

As we know now why it is important to have a structured and mature Vendor Management, the next step is to figure out how mature your Vendor Management is currently. Therefore, we offer a structured and easy-to-understand framework which is based on a 5-level model.

• Our maturity model is focusing on two key aspects:
  1. Get to know where you are – what is the baseline?
  2. Offering a clear improvement path to increase capabilities
     

In order to address these two aspects, our assessment is specifically designed to offer valuable insights into the implications of your as-is situation. It not only brings attention to the risks of not improving, but also highlights the numerous benefits that can be gained from growth and development.

Now that the individual maturity levels have been clearly defined and explained, let's take a look at the individual focus areas targeted by this assessment.