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Nine Steps to Vendor Contract Management

Leanne Strickler
Published August 23, 2022

Vendor contract management is an integral part of any solid vendor management program. Vendor contracts require specific handling, and are complex documents that do more than simply establish terms and conditions.  Managing vendor contracts means not only managing the creation of contracts, but also their negotiation, execution, and review over time. 

The contract management process ensures that both your company and the vendor involved in the contract meet the obligations and expectations put forth in the contract. 

What is Vendor Contract Management?

Vendor contract management is a practice that allows organizations to control costs, mitigate vendor risks, and drive positive vendor performance throughout the vendor’s contract lifecycle. The management of vendor contracts is vitally important to your business, as contracts are legally binding documents and determine a business’s stakeholder relationships, scope of work, pricing, rights and obligations, timelines for projects, warranties and more. 

If your company’s contract management is unstructured or simply doesn’t exist, your business could experience exposure to several different types of risk, including operational, financial, and reputational. 

Contract management isn’t simply keeping track of documents. Contract management means understanding every aspect of a contract so that meaningful insights can be extracted and applied to future contracts. Contract management can be a useful tool to drive business performance and reach specific goals and objectives. 

The goal of the vendor contract management process is to make sure that all parties to the contract meet the expectations and obligations set forth in the contract. 

Here are the steps generally involved in the contract management process:

Nine Steps to Vendor Contract Management

Vendor Contract Management Best Practices

A vendor contract is a legally binding document that lays out the expectations your business has for a particular vendor. The contract will specify the nature of the product or service, the quantity, and the terms under which the vendor will supply these products or services. Your company should be following these best practices when creating and managing vendor contracts: