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A Guide to Common Vendor Management Challenges and How to Navigate Theme

By Avetta Marketing
August 06, 2019
5 minutes
A Guide to Common Vendor Management Challenges

Biggest Vendor Management Challenges

Disruptive events like natural disasters, workplace incidents, data breaches, and supply chain disruptions can all have costly consequences even for the most affluent organizations. Without a doubt, outsourcing has many benefits such as greater efficiency, lower costs, labor force flexibility, and an infusion of skills. But does your organization require adequate third-party risk assessments and controls to mitigate against events like these, and more importantly are your contractors compliant to these requirements? Unless you are prepared, contractor management challenges can be overwhelming. 

Don’t let third-party risk & contractor management challenges ruin the reputation of your organization, leaving you to deal with unhappy customers and stakeholders. These events could also leave your organization exposed to litigation, prosecution, or fines from regulatory authorities. 

What Criteria Is Used To Evaluate Suppliers?

Contractor risk is not just about safety risk. Piggy-backing off your current safety, quality, or risk management systems provides an opportunity to assess current contractor risk, incident, and hazard data for the work being tendered. This can then be used to develop the assessment criteria for your future contractor management system.

The criteria used to evaluate suppliers should include:

  • Compliance and number of certifications

  • Quality management systems

  • Reputation and complaint history

  • Cybersecurity 

  • Financial stability

  • Economies of scale

Navigating Vendor Management Challenges


An effective vendor evaluation process is one that carries protection for your company, allows for strong supplier relations, and gets the job done quickly and without confusion. 

To gain all these benefits, the vendor evaluation process should include the following steps:

  1. Identify and Establish Goals: This sets the standard and expectation for every business unit and every contacted and contracted vendor.

  2. Create a Vendor Management Team: This centralized and dedicated team will work to set KPIs, select relevant vendors, negotiate contracts, track activities, and assess performance.

  3. Use the Supplier Evaluation Criteria: Choose among all relevant suppliers and invite them to submit proposals outlining their pricing structure, scope of work, terms and conditions, and how requirements will be met.

  4. Engage Vendors and Finalize Contracts: Remember to involve all relevant teams (including legal and finance teams) and stakeholders


The purpose of vendor evaluation is not only to hedge your own risks down the road. Prequalifying vendors through a thorough evaluation before forming a partnership allows for safeguards against destructive supplier relationships from starting, but also helps identify valuable suppliers with whom relationships can form and grow.

Yes, an effective contractor management system will make your organization safer and more secure, allowing you to identify and monitor contractor management challenges while improving safety controls across an organization. A contractor management system should also include the ability to assess the strategy, structure, people, process, and technology across the whole of the contractor management lifecycle. With this system in place, vendor evaluation becomes not only possible but priceless.

Vendor Management and the Supply Chain


The contractor evaluation should be the key tool providing a quantitative assessment to ensure that only best-in-class contractors are available to minimize third-party risk to your organization. The supplier or contractor evaluation is a widely used assessment in supply chain management and procurement today; therefore, it makes sense to include this in your contractor management system. The contractor evaluation should be the key tool providing a quantitative assessment to ensure that only best-in-class contractors are available to minimize third-party risk to your organization.

An effective contractor management system can be either online Software-as-a-Service (SaaS) or stand alone on your own server. Whichever method is chosen, it should allow access to your contractors giving them the ability to self-manage themselves, by uploading certifications, uploading compliance documentation, and conducting training modules or accessing induction materials.  

Other valuable aspects that make an effective contractor management system include the risk assessment tool, the ability to establish standards, performance tracking, and cloud-based reporting.

Avetta’s Experience

For over 15 years, Avetta has helped the world's leading organizations overcome contractor management challenges. We can help you develop a contractor management service that will be not only effective but will make your organization safer and more secure, while minimizing disruptions from third party risk. Request a demo now or visit the Avetta Resources page for more great content. 

For more information about Avetta's Contractor Management software, Contractor Prequalification or Supply Chain Risk Management, visit, email [email protected] or call 844.633.3801.

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