Catalog
method#Governance#Delivery#Integration#Security

Vendor Management

Structured approach for selecting, governing and evaluating external suppliers with focus on performance, risk and compliance.

Vendor management is a structured method for selecting, governing and evaluating external suppliers.
Established
Medium

Classification

  • Medium
  • Organizational
  • Organizational
  • Intermediate

Technical context

Contract lifecycle management (CLM) systemsITSM and incident management toolsFinance and ERP systems

Principles & goals

Define clear roles and responsibilitiesMake contracts and SLAs measurable and auditableContinuous performance monitoring and feedback loops
Run
Enterprise, Domain, Team

Use cases & scenarios

Compromises

  • Loss of knowledge when outsourcing critical functions
  • Dependency on single strategic suppliers
  • Contract gaps lead to unexpected liabilities
  • Segment suppliers by risk and strategic value
  • Establish clear escalation and communication channels
  • Regular, data-driven performance reviews

I/O & resources

  • Performance requirements and target KPIs
  • Legal and compliance policies
  • Budget and financial framework
  • Contracts with SLAs and escalation paths
  • Regular performance reports
  • Risk and improvement plans

Description

Vendor management is a structured method for selecting, governing and evaluating external suppliers. It establishes roles, contracts, KPIs and communication processes to manage risks, costs and service quality. The goal is sustainable supplier relationships with clear responsibilities, compliance controls and continuous performance improvement.

✔

  • Better control over costs and external provider performance
  • Reduced supplier risk through standardized processes
  • Improved compliance and traceability

✖

  • Requires organizational effort and governance structures
  • Not all suppliers can be measured in a standardized way
  • Short-term procurements can incur higher overhead

  • SLA compliance rate

    Percentage of times the supplier meets defined SLAs.

  • Time-to-Resolve

    Average time to resolve incidents or outages.

  • Cost variance against budget

    Difference between planned and actual supplier costs.

Outsourced data center operation

Company outsources data center operations to a specialized provider with defined SLAs and escalation paths.

Supplier consolidation for software licenses

Reduction of supplier count to lower cost and complexity while tracking performance.

Managed Security Service Provider (MSSP) partnership

Establishing a long-term partnership including regular security reviews and incident procedures.

1

Identify stakeholders and establish governance

2

Analyze and prioritize supplier portfolio

3

Create standardized contract and SLA templates

4

Implement monitoring and reporting processes

5

Establish regular reviews, audits and improvement cycles

⚠️ Technical debt & bottlenecks

  • Lack of system support for supplier KPIs
  • Manual reporting processes without automation
  • Outdated contract templates without compliance updates
Single-source dependencySlow contract negotiationsUnclear responsibilities
  • Using cost only as decision criterion for strategic selection
  • No regular reviews after contract signing
  • Missing data protection requirements for cloud suppliers
  • Unclear SLA definitions lead to interpretation disputes
  • Over-centralization slows operational units
  • Hidden costs from handover efforts and integrations
Negotiation and contract law knowledgeRisk management and compliance understandingPerformance analysis and KPI reporting
Ensure availability and continuityCompliance and auditabilityCost and contract optimization
  • • Legal and regulatory requirements
  • • Budget and approval cycles
  • • Data protection and security requirements