What is vendor management and why is it important?

Vendor management is a powerful tool for any organization designed to help achieve maximum returns from their business relationships with suppliers and vendors through effective control of the supply chain, combined with monitoring and service delivery.

Lack of vendor governance is a common cause for project failure. It relates to miscommunication, lack of control, ineffective contract management, high costs and unfavorable terms with vendors; potential risks related to the use of vendors; inadequacy in service delivery; and poor value deriving.

Vendor management is a critical factor of a successful purchasing process as it affects all aspects of purchasing activity within an institution. Therefore, effective vendor management can increase purchasing efficiency and improve end-user value by enhancing transparency and adherence to policies.

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