What is a Vendor?
“What is a vendor?” is an important question most people have never asked or answered.
The answer to that question will materially impact how I understand vendor management!
What is a vendor?
That’s a stupid question, eh?
No, it isn’t!
This may be one of the most important questions you have never answered. The implications of the answer to this question will shape how you do Vendor Management.
Here’s my short answer:
A vendor is an entity that does work for you but is not your employee.
Let’s break that sentence down into its component parts:
A vendor is:
“An entity”. This entity may be:
an individual,
a corporation,
a government department, or
another department in your company.
(An entity) “That does work for you”. That work may be a service or a product:
Do they answer phones for you, talk to customers for you, link other service providers together for you?
Do they make payment cards for you, send POS terminals to you, create marketing promotions for you, provide reports for you?
“Vendor” can go under many names: vendor, service provider, supplier, the store down the street, Joe over on 53rd Street – you get the idea.
(This entity) “Is not your employee”. This means:
They have their own employer,
Their employer has its own goals, metrics, and ambitions,
That company’s staff are measured by how they accomplish their employer’s goals, metrics, and ambitions,
You may be one of a thousand customers or their one customer - until they can get a thousand customers.
Here’s an important question:
Do these people work for you?
In other words,
Did you hire them as individuals?
Do you do their annual review?
Can you fire them or have them fired?
If the answer to any of these is “no”, then they are a vendor. Even if it is another department in your corporate organization – if you don’t have direct and unique control over their role, assignments, and performance, they are a vendor.