Vendor management systems are designed to streamline the contract process between vendors and organizations. Here is an overview of the typical vendor management system life cycle:
Planning: Organizations determine their needs in terms of vendors and create a scope of work that outlines their expectations and requirements.
Selection: Organizations review potential vendors, evaluate bids, and select the most suitable one for the job. During this stage, reference checks may also be conducted to ensure reliability and trustworthiness.
Onboarding: This step involves creating contracts with vendors, integrating systems for communication and collaboration, establishing quality standards, setting guidelines for performance evaluation, and providing necessary resources to enable successful delivery of services or products from vendors.
Monitoring: During this phase, organizations need to continuously monitor vendor performance across all stages of the vendor relationship including pricing changes, delivery timeframes, product/service quality etc., and make appropriate adjustments as needed.
Evaluation: At regular intervals (usually on completion of each project), organizations should assess vendor performance based on predetermined criteria defined in the scope of work document created at planning stage. This helps organizations identify areas where improvement is required and take corrective actions if necessary before they enter into another contract with the same or different vendors.