What Is Vendor Management? A Guide to Getting Supplier Relationships Right

Vendor management keeps your operations smooth, your risks low, and your vendor relationships healthy. This guide walks through what it is, why it matters, and how to make it work for your business before things go sideways. In this article, you'll also learn about Wise Business, the international account for growing businesses.

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What Is Vendor Management?

Vendor management is the process of choosing, onboarding, managing, and evaluating the third parties your business relies on, from software providers and raw material suppliers to freelance consultants and logistics partners.

As for what vendor management is in plain terms—it’s everything that happens before, during, and after a contract is signed. Unlike vendor invoice management, which focuses on processing payments, vendor and supplier management is about the entire relationship lifecycle.

That includes:

• Sourcing and selecting the right vendors
• Negotiating and managing contracts
• Tracking performance and SLAs
• Mitigating risks (think data security, compliance, delivery timelines)
• Building long-term, strategic relationships

It’s not just a procurement task, but a business continuity safeguard. No matter if you’re working with two suppliers or two hundred, effective vendor supplier management helps you get what you need on time, on budget, and without surprises.

And when it’s done properly, supply chain vendor management becomes a strategic advantage. It strengthens your ability to scale, reduces operational friction, and creates accountability across your vendor network.

Because at the end of the day, managing vendors is about building a system that keeps your business running smoothly even when things get bumpy.

Why Is Vendor Management Important?

A vendor misses a delivery. Your team scrambles. Customer deadlines slip. And suddenly, one weak link turns into a chain reaction.
That’s why vendor management is important. It helps to reduce risk, improve reliability, and set your business up to scale without constantly putting out fires.

With no vendor management system in place, you’re relying on gut instinct and scattered spreadsheets. That’s risky when contracts are buried in inboxes, performance isn’t tracked, and you can’t remember when that license expires.

Here’s what changes when you manage vendors intentionally:

• Less risk: You catch red flags before they turn into missed shipments, legal issues, or security breaches.
• Better deals: When vendors trust you and you track performance, you’re in a stronger position to negotiate better pricing and terms.
• Smoother scale: For expanding to new markets or onboarding new suppliers, everything runs more predictably when your vendor relationships are organized and transparent.
  Bottom line: Vendor management helps you move from reactive to strategic, giving you control over the partners who help power your business.

Key Stages of the Vendor Management Process

Managing vendors well means thinking in stages and not just reacting when something breaks. A strong vendor management process guides suppliers from selection to offboarding, with visibility and control at every step.

Here’s how that lifecycle typically unfolds:

Stage	Description	Key Activities	Benefits
1. Vendor Selection & Sourcing	Before any contract is signed, you need to find the right partner. This stage is all about vetting vendors.	• Checking credentials• Comparing pricing• Assessing cultural fit• Verifying service capabilities• Weighing risks	The selection process is the foundation of vendor service management. Choose well here, and you'll prevent future issues.
2. Onboarding & Documentation	Once selected, vendors need to be brought into your systems.	• Contract management• Collecting W-9s or tax forms• Setting up payment terms• Locking in vendor contract management details	A clear onboarding process helps vendors deliver from day one. No loose ends and no unanswered questions once the work starts.
3. Performance Monitoring	You can't manage what you don't measure.	• Tracking vendor performance against KPIs• Monitoring SLAs• Checking delivery timelines• Measuring against cost targets• Using dashboards and review cycles	Keeps accountability front and center. Allows you to stay proactive, not reactive.
4. Communication & Issue Resolution	Even the best partnerships hit a snag.	• Establishing clear communication channels• Creating escalation paths• Maintaining updated contact info• Resolving vendor issues quickly	Consistency and clarity protect both sides. Problems get resolved faster before they snowball into delivery failures or disputes.
5. Renewal or Offboarding	At the end of the contract, it's time to re-evaluate.	• Evaluating if vendor met expectations• Assessing if better options are available• Renewing, renegotiating, or offboarding• Preserving data• Closing financials• Maintaining goodwill	A smooth exit is just as important as a smooth start. Proper handling ensures clean transitions regardless of the decision.

This table outlines how a strong vendor management process guides suppliers through the entire lifecycle, providing visibility and control at every step rather than just reacting when problems occur.

Common Vendor Management Challenges (And How to Avoid Them)

Even with the best intentions, managing vendors without a system often turns into a scramble. The more your business grows, the more likely it is that something slips, or worse, breaks.

Here are some of the most common breakdowns and how a proper vendor management process workflow can prevent them.

Scattered Vendor Contact Info

When vendor details live across inboxes, spreadsheets, and post-it notes, it’s easy to lose track. This slows down everything from basic communications to time-sensitive issue resolution.

Fix it: A central vendor contact management system keeps profiles, terms, and key contacts organized and searchable.

No Performance Visibility

If you’re not tracking what your vendors deliver or how well, they’ll set their own standards. Lack of metrics means late shipments, recurring issues, and no clear path to improvement.

The problem isn’t just what’s missed upfront, either. According to recent data, only 27% of vendor risk identification efforts happen during the actual relationship, leaving most businesses exposed long after contracts are signed.¹

Fix it: Build performance tracking into your enterprise vendor management platform. SLAs, KPIs, and regular reviews should be part of the workflow and not an afterthought.

Risky Contracts & Missing Docs

Outdated insurance certificates. Missing NDAs. Terms that auto-renew without review. All of these expose your business to legal, financial, and reputational risk.

Fix it: Use contract management tools that flag expirations, set alerts, and store documents in one place. Compliance should be automated, not a guessing game.

Shadow Vendors

When teams bring in new vendors without formal approval, it’s called shadow procurement. This leads to duplicate vendors, inconsistent terms, and security risks, especially in regulated industries.

Fix it: Enforce a clear vendor management process workflow. Set up request forms, approval gates, and tiered access so every new vendor goes through the right checks.

With the right structure in place, vendor management can help build partnerships that actually move your business forward.

Tools That Take the Chaos Out of Vendor Management

You can’t manage what you can’t see. And once you’re juggling dozens or hundreds of vendors, spreadsheets won’t cut it.

The right tool can streamline your vendor management process from onboarding to offboarding. Businesses managing 10 or 1,000 suppliers can use these platforms to help bring structure, compliance, and visibility to every stage.

Here are a few worth knowing.

Save Time and Money On Overseas Payments With Wise Business

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Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies.

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Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to countries and hold balances in multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

Gatekeeper

Gatekeeper is a cloud-based contract and vendor management platform designed to help midsize to enterprise businesses gain full control over their vendor ecosystem. It centralizes all supplier records, automates onboarding and contract workflows, and proactively flags compliance and renewal risks.

With built-in collaboration tools and detailed audit trails, it’s a solid choice for companies that need enterprise vendor management with a strong emphasis on governance, risk mitigation, and vendor contact management.

Key Features

• Vendor risk scoring and audit trails
• Automated reminders for contract renewals
• Customizable onboarding workflows
• Integrations with Slack, Salesforce, and more

Pricing: Plans start at $1,245/month for up to 150 suppliers and contracts. Higher tiers offer expanded capabilities.²

SAP Fieldglass

SAP Fieldglass is purpose-built to manage external workforce vendors, from freelancers and consultants to global staffing partners. Ideal for large enterprises with complex service procurement needs, it offers end-to-end vendor lifecycle management, spend visibility, and compliance tools.

Whether you’re tracking contract workers or managing contingent labor at scale, Fieldglass helps bring structure, transparency, and control to your vendor and supplier management workflows.

Key Features

• Supplier scorecards and spend tracking
• End-to-end vendor lifecycle automation
• Built-in compliance and security controls
• Deep SAP ERP integration

Pricing: Pricing is customized based on usage and contract terms; details are available upon request.³

Tipalti

Tipalti is a robust end-to-end payables automation platform that goes beyond payments to streamline vendor onboarding, tax compliance, invoice processing, and global disbursements.

It’s particularly useful for high-growth businesses—especially in SaaS, gaming, ad tech, and media—that need to manage complex, multi-entity payables across borders. Its self-service portal and built-in compliance tools reduce admin overhead and mitigate fraud risk.

Key Features

• Global tax form collection (W-8/W-9, 1099)
• Mass payouts in 120+ currencies
• Supplier self-service portal
• Fraud prevention and OFAC screening

Pricing: Plans start at $129/month for the Starter package. Additional features and higher-tier packages are available at increased pricing.⁴

Venminder

Venminder specializes in vendor risk management, offering tools to help businesses assess, monitor, and document third-party risks throughout the entire relationship lifecycle.

It’s a go-to platform for regulated industries like finance, healthcare, and insurance, where compliance is non-negotiable. Built-in assessments, audit support, and real-time alerts help teams stay ahead of due diligence and regulatory requirements.

Key Features

• On-demand risk assessments
• Pre-built vendor questionnaires
• Document tracking and audit support
• Regulatory updates and breach alerts

Pricing: Venminder offers flexible, capability-rich packages tailored to organizational needs. Specific pricing details are available upon request.⁵

Vendor Management vs. Vendor Invoice Management

They sound similar, and yes, they’re connected. But vendor management and vendor invoice management solve different problems for different teams.

Think of it this way:

• Vendor management is the full relationship.
• Vendor invoice management is just the paperwork that follows.

Here’s how they compare:

Category	Vendor Management	Vendor Invoice Management
Scope	Full lifecycle: Onboarding to offboarding	Focused on invoice validation, matching & payments
Focus Areas	Risk, contracts, performance, communication	Invoice approval, scheduling, and compliance tracking
Used By	Procurement, operations, legal, and finance teams	Primarily accounts payable and finance teams
Tools Involved	Vendor portals, contract management systems	Invoice automation platforms, supplier invoice management tools
Automation Goals	Reduce risk, centralize data, strengthen relationships	Speed up payouts, reduce errors, streamline cash flow

Both systems play a role in financial operations, but if you’re looking at vendor invoice automation, you’re zeroing in on the transactional layer of vendor and supplier management.

One handles relationships. The other handles receipts.

Final Thoughts

Vendor management isn’t just about cutting POs or signing contracts. It’s about building relationships you can rely on and having the structure to support them as your business scales.

The more vendors you work with, the more you need visibility, accountability, and consistency. That’s where a clear process (and the right software) makes all the difference.

In fact, the vendor management software market is expected to grow 15.6% in 2025, which is proof that businesses are treating vendor relationships as strategic, not secondary.⁶

Start by auditing your current vendor workflow. Are you managing vendors or just reacting to problems as they come up? If it’s the latter, it might be time to level up.

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Sources
10 Vendor Risk Statistics to Be Aware Of | Veridion
Gatekeeper Reviews || HyperStart
Pricing for SAP Fieldglass Services Procurement | SAP
Tipalti Vs Concur | Tipalti
Pricing & Packaging | Venminder
Vendor Management Software Global Market Report | The Business Research Company