A single business is not an isolated box, fully self-sufficient in serving the needs of its customers. Every single business needs to buy goods and services, whether something as ordinary as office goods or something more particularized like a custom product or service. Buying requires contracts, and contracts require management. This is the vendor management process: storing, organizing, negotiating, renewing, and terminating contracts with a business’s various suppliers.
In a small business, vendor management is often run by the controller who handles things like negotiating vendor contracts, paying suppliers, and storing contracts. In a larger business, vendor management is handled by procurement. Procurement professionals generally work with purchase orders that can include multiple vendor contracts under a single purchase order adding complexity to the process. Both controllers and procurement frequently run into common problems during vendor management that ultimately can cost a business money unnecessarily.