Supply Chain Management
Organizational Benefits of an Effective Vendor Management Strategy

Article Details
Pub. Date : Dec, 2019
Product Name : The IUP Journal of Supply Chain Management
Product Type : Article
Product Code : IJSCM31912
Author Name : Shannon Cleary and Carolan McLarney
Availability : YES
Subject/Domain : Strategic
Download Format : PDF Format
No. of Pages : 18



This paper articulates the benefits of an effective Vendor Management Strategy (VMS). Organizations will benefit from a VMS as they can achieve maximum value through multisourcing strategies. Multisourcing strategies support a diversified vendor relationship, consistent processes, reduced costs and the opportunity to negotiate better terms based on volumes. A formalized strategy improves the overall customer relationships by establishing mutual expectations and generates greater profitability. The true benefit to the organization is performance management, creating efficiencies and controlling risks of a third party, regardless of whether the business is operating in a local or global environment. The success of VMS supported by a framework and a strong leadership team to integrate and build vendor partnerships with technology will provide a solid foundation to construct an effective model. As companies look to differentiate in the global marketplace, there is a strong focus on optimizing the supply chain to remain competitive. Corporations like Walmart and Cisco have elevated the importance of a business with an effective VMS. Specifically, they have focused on excellence in performance management, inventory management and corporate sustainability. Looking beyond an effective VMS, this paper focuses on how a business can deliver a differentiated, innovative, and agile VMS through the support of outsourcing data to cloud computing vendors. Being digitally-enabled is a competitive advantage and will have a significant impact on the business.


A vendor is an individual or a business that sells a product or a service. For example, a third-party vendor could be a cloud computing service provided by that supports the integration of legacy systems across an organization. It could also be a photocopy company that leases copiers to a business. A business strategy outlines the expected goals supported by vendor partnerships:

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