Increased globalization, a more competitive marketplace, and the need to fill specialized roles are just a few reasons why companies are increasingly reliant on the external workforce – contractors, temporary and seasonal workers, and services firms managed under statements of work (SOW) – to augment and supplement their total talent base. Recent research reports that one in two executives plan to increase their use of external labor, making a VMS more necessary today than ever before. To address these business pains, companies rely on vendor relationship or supplier relationship management software. It also makes it difficult for employees to know which vendors they are supposed to buy from. The lack of visibility into vendor information and vendor performance increases a company’s supply risk and impedes the ability to act quickly when dire situations arise – like a natural disaster, product recall, or ethics violations. It quickly becomes an outdated and manual system for vendor information management. What’s more, as enterprises extend global operations and work with vendors around the world, vendor data is often kept locally, in spreadsheets or on individual hard drives. It’s even more difficult to know about the vendors their vendors work with, and the ones they work with, and so on down the line. This makes it difficult for companies to know everything they need to about their vendors and monitor their performance.
Whichever they’re called, many enterprises work with thousands of vendors linked together in supply chains stretched around the globe.
Some types of companies are more apt to use one term over the other. In this scenario the term vendor is sometimes used interchangeably with supplier. For example, a company may need steel to make a bike, or components to make a car. These types of vendors are suppliers or providers of goods and services that a purchasing company (“the buyer”) needs for day-to-day operations and the fulfillment of its mission.
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