How to Improve Efficiency in Your Vendor Risk Management Program

It’s not enough that you have established a vendor risk management program that meets or exceeds regulatory guidance and audit requirements. Your organization should also make sure that your program is efficient in its processes and works to enable business, mitigate risk, ensure compliance and that it fits into your organization’s overall structure.

Often vendor management programs are:

• Built out with strict adherence to regulation
• Are reactive to external pressure
• Are copies of what worked at other organizations without much thought to the internal policies, processes and resources that are required within your own organization
• Designed with processes that are not scalable and repeatable
• Are manual in nature or have single points of failure within the delivery structure
• Are rooted in redundant tasks – with vendors and business units repeatedly responding to similar requests in slightly different ways, maintaining different document sets for each

And, because of these inefficiencies, your organization unnecessarily will tie up resources, while lacking clear risk mitigation or improvements in quality and service delivery.

4 Steps to Improve Vendor Risk Management Efficiency

Here are some steps to help you overcome inefficiencies in vendor management.

1. Reach a common understanding of expectations regarding roles and responsibilities throughout the entire process. This can be facilitated through the establishment and use of industry standards.
2. Once you have a process, ensure to follow it and be consistent. Straying from that undermines your governance strategy. At a high level, standardization is needed to ensure that multiple internal and external stakeholders are aligned and coordinated and able to track constantly moving parts. 
3. Do a self-assessment on your vendor management maturity levels. Gauging that can provide a starting point for your vendor management team to identify areas of strength, expose gaps and chart an improvement plan.
4. Once you determine your level of maturity, determine which parts to retain and which parts to outsource. Outsourcing vendor management to specialists can allow you to focus on the strategy, value-add activities while a third party can take care of routine, administrative and tactical activities. It’s a cost-effective and efficient choice.

11 Guidelines to Help Improve Vendor Risk Management Efficiency

It’s important to keep the following vendor management organization guidelines in mind when looking to improve vendor management efficiency:

1. What processes are truly a value-add to your organization? If it doesn’t provide value, then you should ask yourself why it’s part of the program and what’s the purpose.
2. Does your vendor management framework support the overall strategic and business objectives of your organization?
3. Is your vendor management program aligned with how your organization conducts business?
4. Do you have the right people in the right place within your vendor management organization?
5. Are your processes scalable and repeatable to handle increased capacity and scope?
6. If you rely on other organizations to support the vendor management process, have you assessed their capabilities in supporting your program?
7. Establish service level agreements internally with stakeholders of the vendor management process and business partners.
8. Once SLAs have been established, continually review and assess their effectiveness and if they are meeting the needs of the organization. If not, reassess your process.
9. Be open to change and new ideas – do not continue to perform activities within your program just because “that’s the way it has always been done.”
10. Review your vendor management program framework to look for redundant activities.
11. Each part of the framework should be reviewed to include:
• Governance
• Board
• Executive / Management Oversight
• Committee
• Structure
• Operating Model
• Policies
• Procedures
• Processes
• Vendor Lifecycle Management
• Planning
• Vendor Selection
• Due Diligence
• Contracting
• Ongoing Monitoring / Periodic Reviews
• Termination / Renewal

Improving efficiency improves vendor management and business results.

To help with efficiency, ensure you have a proper vendor management policy, program and procedures in place. Download our eBook to learn more.