Vendor Management
Vendor management is the work of selecting suppliers, contracting them, and then managing what they deliver against what was agreed. On an IT project it covers selection and scoring, statements of work, purchase orders and invoices, performance review, escalation routes, and the exit position when the engagement ends.
What it contains
Vendor management on a delivery programme has four moving parts. The first is selection: a requirements matrix, weighted scoring per supplier, and a documented recommendation. The second is contracting: the master agreement, the statements of work beneath it, and the rate card. The third is financial control: purchase orders raised, invoices received, amounts approved, and the position against each SOW's value. The fourth is performance: whether deliverables arrived, whether they were accepted, and how the supplier behaved when things went wrong.
Around those sit the registers. An SOW register with value and burn. An invoice log matched to PO and milestone. A supplier scorecard covering delivery, quality, responsiveness and commercial behaviour. The budget and vendor workbook holds those in one place because in practice the same person is chasing all four.
How it is used
Selection is the phase with the most process and the least ongoing attention. A weighted scorecard exists to make the decision defensible afterwards — to show which criteria mattered, how each supplier scored, and why the recommendation followed. That record matters when the choice is questioned a year later, which is what the selection tracker preserves alongside the SOW register that follows.
In delivery, vendor management is mostly reconciliation and conversation. Invoices are checked against POs and against milestones the plan says are complete. Deliverables are formally accepted or returned. Where the supplier is blocked by something the buyer owes them, that goes on the dependency register like any other commitment.
Performance review is the part most often skipped. A quarterly scorecard, shared with the supplier, changes behaviour more reliably than escalation does — partly because it creates a record before the relationship is under strain. Vendor performance is also standing content in steering committee reporting whenever a material share of delivery is outsourced.
Where it goes wrong
The most damaging pattern is a project managed as if the supplier is a department. Instructions are given informally, scope drifts through goodwill, and neither side tracks what has been asked for outside the SOW. It works until the relationship strains, at which point the contract is the only record and it says something different.
The second is invoice approval detached from delivery. Invoices are approved by finance against a PO without anyone confirming the underlying milestone was met. Overpayment against progress is discovered late and is difficult to recover.
The third is a single point of contact on both sides carrying the whole relationship. When either person leaves, the undocumented understandings go with them.
The fourth is exit planned at the end. Knowledge transfer, documentation, credentials, source code and support arrangements are cheapest to secure while the supplier is still engaged and expecting more work. Treating handover as part of closure rather than an afterthought is what makes that possible.
Related terms
Statement of work defines what a supplier will deliver and for how much. Purchase order is the buyer's commitment to pay, usually raised against an SOW. Rate card lists agreed day rates by role. Supplier scorecard is the periodic performance record. Exit plan covers knowledge transfer and continuity when the engagement ends.
Questions
What is the difference between procurement and vendor management?
Procurement usually runs selection and contracting. Vendor management continues after signature and covers delivery, performance and the commercial position during the engagement.
How often should suppliers be formally reviewed?
Quarterly is common on long engagements. The value comes from having a written record before a dispute, not from the frequency itself.
Who approves supplier invoices?
Finance processes them, but approval that the underlying work was delivered belongs with the project. Separating those two checks is what prevents paying for incomplete milestones.
What should be agreed before an engagement ends?
Documentation, credentials, environment access, knowledge transfer sessions and any ongoing support terms — agreed while the supplier is still engaged rather than after the final invoice.