How to Overcome These Top 7 Challenges in the Vendor Management Process?

vendor management process

Last Updated on May 8, 2023 by Team Experts

A vendor is someone upon which our business’s survivability depends. So an effective vendor management relationship is what will help during hardships. If you neglect your vendors then it might be possible that someday they leave you for your rival company. For example- Suppose you routinely ask your vendor to quickly supply this x quantity of raw material at short notice. One day the vendor will get frustrated and hence leave supplying you completely. If you spend a little time studying your vendor’s nature and preferences it might help you negotiate your deal with them better. Today we will study these. On a side note if you are on the lookout for a good accounts payable workflow solutions software, here is one.

We will see the top 7 challenges which companies face in their vendor management and how to mitigate them. 

Here they are:

1. Understand The Nature of The Relationship:

Vendors are not robots so they are also the same humans like us. So talk with them and maintain a database too about their talking points, interests, and which topics to avoid while talking with them. If you do this successfully then you can nurture a good relationship with your vendor. But a human relationship is a complicated affair, so tread carefully in this regard as your company’s bottom line depends on it. 

2. Past is Past:

This is again a classic blaming the missing person tactic. What happens is everything that is broken is the cause of the guy who is dead or left the company. Do not do this. Remember what happened in the past, you have a collective responsibility today to fix their faults. So start mending broken vendor relationships and take control of the situation rather than playing the blame game. Experienced managers understand this very well hence you will see them still maintaining a working relationship with most of the people in their old network as you never know who might be useful when.

3. Expectations:

A vendor relationship is not like a bullet train in which you will give effort one day and then it will take off. For it is like a sailboat, you give consistent efforts and then maybe one day you will reach your destination. So keep your expectations accordingly. Also do not expect that once you create a working vendor relationship that they will start doing your favors. It will also take some time to get used to. This process can take years. All that you can do is give your best effort and hope that the results work. 

4. It’s an Ongoing Process:

You might leave the company and go elsewhere but the vendor will remain here, for this is their livelihood. Unless something extremely bad happens the vendor is likely to retain his position of supplying to your company. So remember this, that he is going to stay here it is you who is temporarily passing. So maintain a diary and keep all the talk points and other relevant information which the next manager can refer to for keeping the vendor relation as good as it is now.

5. Be Open To Changes:

Sometimes due to any unforeseen circumstances, change is inevitable. For example- Earlier you had to call up the vendor and place the order for raw materials, now due to the invention of technology you could essentially order using the respective vendor’s online portal. So leverage this change and try to place the correct quantity of orders before placing it. 

vendor management

6. Create a Good Interdepartmental Communication Channel:

Sometimes due to a lack of effective communication between the vendor and the various departments like sales, procurement, warehousing, etc wrong orders get placed. For example- suppose you own a departmental store and you place an order for ice chips when your warehouse has no space left for ice chips. So how do you solve this problem? Simply ask the respective departments who are also involved with this order about their ability to handle them or not. If you ask the vendor to take back the good he just came to deliver then this will dampen your relationship with him and may even break it if you keep on doing this.

7. Create a Dedicated Vendor Relations Team:

As your business grows by leaps and bounds it might be prudent to have a dedicated team handling them. Since the number of vendors may also increase as your business grows, managing them might be difficult for a single manager. 


Remember a vendor is the most important person for a business and it is absolutely critical that you position yourself on the good side of the vendor otherwise you may fall behind your competitors who will leave no opportunity to develop an exclusive relationship with your vendor.

Also read: 5 Things Every Business Corporation Needs to Succeed


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She has over 7 years of experience writing about technology, education, digital marketing, general and business. Her experience in the tech industry (fieldengineer, wowtechub, techsprohub, techinfobeez) has taught her how to write engaging, informative content that makes complex issues accessible to a wide audience. Follow her on Linkedin

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