Vendor Maturity Matters: Why Moving up the Vendor Maturity Scale is Important

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Vendor relationships are more than transactional.

They’re strategic partnerships that should contribute significantly to your business's success, competitiveness, and sustainability. 



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Nurturing vendor relationships is essential for long-term growth and resilience in today’s dynamic and easily disrupted business environment. Studies reveal that 10-30% of the promised benefits from these relationships are lost when services and contracts are poorly managed. 

A lack of formal policies, inconsistent procedures, or minimal stakeholder buy-in can cause exceeded budgets, delays in contracts, vendors that expand scope without guardrails, and agreements rife with performance issues – all of which decrease value, increase costs, and increase risk for the organization.

Even if you handle vendors on a project-by-project basis – or when there are a limited number of policies and procedures in place without repeatable processes, playbooks, and templates – you risk unpredictable, uncontrolled, and reactive relationships.

Understanding the Vendor Relationship Maturity Model

The vendor relationship maturity model offers a framework to assess and improve how you manage external partners. It lets you align your objectives, expectations, and processes with your vendors and fosters collaboration, trust, and innovation.

Once you determine your current maturity level, you can identify gaps and opportunities between your current and desired state. Then, the execution of a formal vendor management/procurement operating model allows the business to realize additional value, improve cost-saving targets, and reduce risk.

Moving Up the Maturity Scale

Moving up the maturity scales means creating a more effective and impactful vendor management/procurement organization. Vendor management offices (VMOs) and procurement departments should be strategic partners for your internal stakeholders, allowing them to achieve maximum value, savings, and negotiate well-performing suppliers and contracts.

Increasing vendor maturity makes your VMO a more valuable internal team by reducing value leakage and helping realize the full benefits of contracts. Improved maturity drives the right policies and procedures by formulizing standardized, detailed, and repeatable processes.

By creating lasting partnerships with key suppliers, you will drive savings, innovation, thought leadership, and partners who are accountable and have your best interests at heart.

Benefits of a Mature Vendor Management Office (VMO)

A mature VMO optimizes relationships and fosters long-term, strategic partnerships with vendors. The benefits of vendor management maturity include the following:

Enhanced Vendor Relationships and Service Delivery 

As organizations mature their vendor management, they develop more robust and strategic relationships that generate improved collaboration, increased trust, and aligned goals and objectives. Strong vendor relationships yield better service levels, higher customer satisfaction, and increased value delivery.

Risk Mitigation

Mature VMOs better identify, assess, and mitigate risks associated with vendor engagements. They better evaluate vendors' financial stability, regulation compliance, data security measures, and overall performance. Proactively managing vendor risks allows your organization to avoid potential disruptions, legal issues, reputational damage, and financial losses.

Cost Optimization 

Mature vendor management facilitates cost optimization opportunities by leveraging your improved understanding of vendor performance, pricing models, and contract terms to negotiate more favorable agreements and reduce unnecessary expenses. By strategically managing vendor relationships, organizations can identify areas for consolidation, standardization, and efficiency improvements – all direct factors in cost savings.

Operational Efficiency

Standardized procedures, documentation, and tools enable organizations to manage vendors more effectively and consistently, reducing administrative overhead, minimizing errors, and enabling faster decision-making. This added efficiency frees resources to focus on other value-added activities and strategic initiatives.

Compliance and Governance

Mature vendor management supports regulatory compliance and effective governance practices with better visibility into vendor activities, ensuring adherence to contractual obligations, performance levels, and improvement opportunities.

Continuous Improvement 

Advancing up the maturity scale encourages a culture of continuous improvement in your vendors. Regular performance assessments and feedback mechanisms identify areas for enhancement. Continuous improvement ensures vendor management practices evolve with your changing business needs and industry trends.

Vendor Management Maturity in Action

A large North American Automotive Manufacturing Company recognized that its sprawling roster of IT vendors was underperforming and overcharging. It needed a new strategy to corral and restructure dozens of vendors and nearly 2,000 vendor resources across multiple service towers.

The org needed more mature vendor management processes. Many vendors individually supplied little to the overall operation yet collectively amounted to a significant total spend. A holistic strategy and new sourcing model improved service delivery, customer satisfaction, and vendor management capabilities, netting $50 million annually in cost savings.

Growth Through Vendor Maturity 

K&B Global understands the importance of vendor management maturity and how impactful it can be on your business’ finances and operations. Regardless of where you land along the maturity scale, K&B can provide personalized recommendations that deliver the benefits of an efficient VMO.

From full assessments that support a long maturity journey to rapid assessments that identify specific areas to fine-tune, our veteran consultants put their decades of sourcing and vendor contract expertise to work for you. Take our interactive Vendor Maturity Assessment today, and contact us for a free consultation to explore ways of future-proofing your business through mature vendor sourcing and management.


Use our vendor maturity calculator to determine how close your VMO is to delivering valuable, strategic partnerships that contribute to cost savings, innovation, and business growth.

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