Important Vendor Management Process Terms

Below are some standard vendor management process terms to know:


  • Vendor Management Office (VMO): This is a business unit dedicated to evaluating goods and services vendors that oversees interactions, ensures that buying activity aligns with corporate goals, and is responsible for long-term vendor relationships. As IT has become more critical to company competitiveness and functions, IT-dedicated VMOs have become more prevalent.

  • Vendor Lifecycle Management (VLM): VLM is an end-to-end approach to managing vendors with transparency and structure. In many forward-thinking companies, lifecycle management has taken piecemeal, siloed purchasing by individual departments for greater efficiency and support the overall strategy.

  • Vendor Relationship Management (VRM): VRM refers to the process of nurturing relationships with suppliers of services and products. The goal is to ensure smooth operations by delivering quality services and products promptly that meet or exceed their contractual obligations.

  • Vendor Management System (VMS): These are software suites that help businesses take care of processes involved in the end-to-end vendor management process, from initial contact to final closure of a deal or the establishment of a business relationship. A VMS usually has apps or specific modules dedicated to processes like onboarding, time tracking, delivery monitoring, invoicing, and payments.

  • Vendor Insourcing: This refers to charging company departments and personnel to deliver services or products. Companies with multiple subsidiaries might use one subsidiary to support another.

  • Vendor Outsourcing: Outsourcing is the hiring of unaffiliated external organizations to complete specific tasks. Vendor outsourcing works in a variety of business settings, from retail to entertainment to manufacturing.

  • Vendor on Premises (VOP): This is an exclusive, long-term general contractor relationship with a separate company that provides products or services on the hiring company’s premises. The VOP might also subcontract other vendors on an as-needed basis, with the approval of the hiring entity. Large-scale manufacturers often rely on VOPs.

  • Managed Service Provider (MSP): MSPs outsource the responsibility for anticipating and maintaining a range of functions and processes to improve operations and cut expenses. MSPs are often the providers of specialized IT services.

  • Employer of Record (EOR): An organization assumes legal responsibility for all aspects of human resources and acts as its employees’ employer. EORs keep the business in compliance with regulations, labor laws, and other types of legal restrictions. In international scenarios, regulations regarding benefits, taxes, and compliance can be complex. Tech companies use EORs to hire staff under work visas.

Leave a Reply

Your email address will not be published. Required fields are marked *