If Vendor Management is Someone’s Side Job, You Have a Problem
By Celia SGAR
In many organisations today, vendor management is not treated as the strategic priority it should be. It is assigned to someone as a side task, squeezed between competing responsibilities in Procurement, IT, or Operations.
At first glance, this may seem harmless. After all, the contract has been signed, the supplier selected, and Procurement has delivered its KPIs. What could go wrong?
Quite a lot, as it turns out.
Over the past 16 years, managing global IT vendors for companies like PepsiCo, Nestlé, and Danone, I have witnessed this mistake time and again. Once the contract is signed, the structured engagement often ends. Procurement moves on to the next sourcing project. Business units expect delivery to happen automatically. IT is already managing technical issues on their side.
The result is predictable:
- No governance structure in place
- No systematic performance tracking
- No alignment between vendor activities and evolving business goals
- No proactive risk monitoring
- No structured relationship building
In other words, millions in value leak silently out the back door.
Procurement is Not Vendor Management
The core misunderstanding lies in a confusion of roles. Procurement and vendor management are two distinct disciplines.
Procurement is about sourcing, negotiating, and contracting. Its success is typically measured by cost savings, sourcing efficiency, and risk mitigation at the point of contract.
Vendor management is about what happens after the ink is dry. It is about ensuring that value is realised over the lifecycle of the relationship. It involves continuous performance monitoring, managing service quality, addressing emerging risks, fostering collaboration, and driving innovation.
Too often, this work is left to chance. Vendors operate on autopilot, while internal stakeholders assume someone else is managing performance. Without ownership, no one drives accountability, and no one ensures that the relationship evolves with business needs.
The Role of a Vendor Management Office
This is where a Vendor Management Office (VMO) comes in. A VMO is the missing link between contract signature and delivered outcomes.
An effective VMO ensures that vendors are systematically managed across four key areas:
- Governance
Establishing structured interactions at operational, tactical, and executive levels. Regular review meetings, clear agendas, and documented follow-ups ensure accountability on both sides.
2. Performance Management
Using scorecards and KPIs to track what matters, not just service delivery, but also innovation, risk, partnership quality, and alignment with business goals.
3. Risk Monitoring
Proactively identifying and mitigating risks that arise during the lifecycle of the engagement. This includes financial risk, compliance issues, operational risks, and reputational concerns.
4. Relationship Development
Moving beyond transactional interactions to foster true collaboration. Strong relationships encourage transparency, joint problem solving, and supplier-led innovation.
Without a VMO or a similar structure, these activities happen inconsistently or not at all.
The Skills Gap
One reason companies struggle with this is that the required skills are different. Procurement professionals are trained in negotiation, sourcing strategy, and contract law. Vendor managers need expertise in governance, performance analysis, relationship management, and continuous improvement.
Expecting a Procurement manager to handle vendor management on the side, without dedicated focus or training, is setting them up for failure. The same applies to IT or business stakeholders.
If you want to maximise value from your suppliers, vendor management must be treated as a distinct discipline, with clear ownership and the right skills.
Conclusion
If no one owns vendor performance after the deal is done, you are not managing vendors, you are simply buying from them.
Organisations that recognise this gap and invest in proper vendor management consistently see better outcomes:
- Stronger supplier performance
- Reduced risk
- Higher levels of innovation
- Better alignment with business strategy
- More resilient partnerships
In an environment where supplier ecosystems are increasingly complex and critical to business success, this is no longer optional.
Ask yourself: in your company, is vendor management a real job, or someone’s side job? The answer may tell you more than you think about your ability to extract real value from your supplier relationships.
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