Understanding the Hierarchical Dynamics Between Vendor Relationship Management, Sourcing, and Purchasing

Author(s): Steve Jeffery

In the post-pandemic era, organizations face complex challenges in managing their vendor ecosystem, which includes financial stability, remote workforce dynamics, vendor risks, compliance, cost management, and sustainability. This document emphasizes the importance of a proactive and flexible approach to vendor management, going beyond traditional procurement functions. It outlines the hierarchical relationship between VRM, IT sourcing, and purchasing, each with distinct objectives and skill-set requirements. VRM focuses on strategic oversight and relationship-building, while sourcing and purchasing are more tactical, emphasizing negotiation and transactional skills. The document concludes that establishing a clear hierarchy and symbiosis among these functions is crucial for maintaining a competitive edge and fostering trust, effective communication, and defined roles and responsibilities.

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