What's The Difference Between Vendor Management and Strategic Sourcing
The concept of Strategic Sourcing has existed from many years now. Vendor Management function is evolving from past few years and has now reached a stage where companies are now finding it hard to draw a line between the two. What does a strategic sourcing manager do that a vendor manager doesn’t? Are there any overlaps in responsibilities between the two? How to tell a Vendor Manager apart from a Sourcing Manager.? I have had these questions asked by multiple people within my organization who easily assume that I am a Sourcing Manager. I have to then wear my coaching hat educate them on the difference between the two. I don’t blame them as there is no standard way how every company structures the sourcing organization and uses the two functions. Few organizations have the roles more clearly defined than others.
In order to define what Vendor Management Office (VMO) does, I need to define on a very high level what Strategic Sourcing Group (SSG) does.
What is Strategic Sourcing?
Strategic Sourcing Group in any organization can play an important role in the selection of vendors either through a tender process or single sourcing. SSG gathers business requirements, creates a selection criteria, negotiates a Master Services Agreement & initial pricing, onboards new vendors, completes internal contract storage to meet compliance requirements. There is a ton of other work that goes in the background to make that happen. SSG usually has Sourcing Managers and Contract Managers, and they usually work very closely with Lawyers. They are your contract experts in the organization.