Vendor management is a complex task. It can also have far-reaching implications. A good relationship with your vendors can mean on-time delivery and efficient inventory management. On the flip side, a poor vendor management system can lead to bottlenecking and other inefficiencies. Vendor management comes down to a lot more than simply trying to haggle for the lowest price.

No two vendors are the same. Your company will have unique needs and sometimes trying to force a relationship with a vendor that doesn’t match up well with your company can be like trying to fit a square peg in a round hole. Think of things like company culture and volume of your orders before making the decision of which vendor to give your business.

Choose your model – would you prefer to keep the vendor management in house or outsource the job?

Learn how to best organize your vendors. What types of parts or service does each one supply? Is there any overlap? Could you consolidate two different parts coming from two different suppliers so that they come from one common supplier? According to an article on, GM saved $6 billion by organizing their supply side.

Make sure you know what you’re looking for. Before beginning the actual search for vendors, make a list of the “deal breakers” and the “negotiables.” Put the most crucial things that you’re looking for from a vendor in the deal breakers category and put the items that your company is more pliant on in the negotiables category. Having a clear criteria for selecting vendors will take a lot of the guesswork out of the search and will save you and the hiring managers some serious headaches.

Look at your target output when making this list. This will give you an idea of how much the vendor needs to be able to deliver on a weekly or monthly basis. Look at your past relationships with vendors and keep track of the things other vendors did well or did poorly. One of the most crucial parts of supplier management is communication, so by knowing and communicating your expectations to the supplier you can lessen the possibility of misunderstanding and problems in supply.

Having a good vendor management system in place is not a simple process. It is a continuous process of maintaining communication with your vendors and constantly looking at your own supply. If you are able to achieve good vendor management, your company will be in a position to be successful.