Denver, Colorado

The Consequences of not Prioritizing Vendor Management

You may think that your company’s unique value proposition (UVP), culture, business processes, technology, and people are pretty clear. But vendors don’t always see things the same way you do. They may not comprehend what makes your company special to the world.

This lack of understanding can lead to poor service delivery because vendors don’t know how best to serve you or how they can be most helpful in achieving your goals. If a vendor doesn’t understand what makes your company unique, they won’t be able to make an impactful contribution on behalf of their clients.

A lack of understanding will also lead to vendors missing out on opportunities that could help them better serve their clients. For instance, a vendor may not understand your company’s mission or vision, so they won’t be able to offer creative suggestions for improvements to achieve those goals.

Vendors may also not understand your company’s unique brand, which can lead to a poor customer experience. A vendor who isn’t familiar with how you approach problems and opportunities will be less likely to invest time in developing an innovative solution that meets their client’s needs.

They may not be able to adapt to changes in the marketplace or your business

If you’re not actively managing your vendor relationships, the vendors you do business with will likely be unable to adapt to changes in the marketplace or your business. This could mean they have trouble keeping up with industry trends and advancements, which would leave them at a disadvantage compared to their competitors. If this happens, it could potentially lead to losing customers and sales.

In addition, if any major changes within your organization or other factors affect these vendors’ businesses (such as layoffs or new hires), they might not know how best to communicate these changes internally so that everyone else can understand what’s going on.

Managers who don’t prioritize vendor management may not understand how their vendors are performing, or they could miss major issues that could have been avoided with better oversight. It’s important to keep track of what your vendors are doing so that you don’t get blindsided by unexpected problems.

When a vendor stops performing at its best level, it can be difficult for the company that hired them to adjust. For example: if you were hiring an SEO agency and they stopped working on your SEO strategy, you might start seeing fewer visitors coming to your site from search engines like Google or Bing. This would mean less revenue for your business.

Your data may be at risk

If you’re not keeping tabs on your vendors and their data, there are several ways that your company could end up losing its most valuable asset. Data security is one of the biggest issues facing companies today, and it’s important to remember that hackers aren’t the only ones who can steal information from a vendor. Data loss can arise due to:

  • Human error: Human error is the most common cause of lost data. A salesperson may email sensitive information in the subject line by accident, or an office manager might forget to delete an attachment after forwarding it to a client. When these things happen, it’s usually because people are simply overwhelmed—and they’re not thinking about what they’re doing as much as they should be.
  • Vendor failure: A vendor failure is when something happens outside of your control. For example: if an employee at a third-party company accidentally deletes all of your files or deletes all his files without telling anyone else first. In some cases, this situation can make sense from both sides: maybe he didn’t know how important those files were yet, so he decided not to worry about them.
  • Vendor incompetence: Vendor incompetence is when a vendor doesn’t know what they’re doing or doesn’t have the right skill set to do their job properly. This may be because they lack experience, so it’s hard for them to understand how things work in your industry, and therefore aren’t able to make good recommendations based on their knowledge base (or lack thereof).
  • Vendor negligence: Vendor negligence occurs when there has been no attempt made at all by either party involved in the transaction – which puts both sides at risk.

Vendor management can help reduce the risk of data loss by ensuring that the vendor’s policies align with what you need and by providing regular training for their staff. It can also help to have a third party audit your vendors’ data protection capabilities. 

This is especially important if you’re working with offshore providers since it may not be possible for them to comply with all of your requirements due to local laws or cultural differences.

You might fall out of compliance with privacy laws and regulations

The privacy laws and regulations that govern organizations today are complex, and it takes a skilled team to ensure you’re in compliance. The good news is that many tools are available to help you get the job done. But if you neglect vendor management, your team won’t have access to these tools when they need them most—and things can go south very quickly.

For example, maybe one of your vendors has access to personal information about customers (like their name or contact details), but isn’t respecting the policies around data protection or retention. When this happens, an investigation will likely be launched into how much damage was done during this period of non-compliance—meaning there could be fines involved.

The key takeaway here: Vendor management is a key part of compliance. Without it, you won’t be able to manage your vendors—and that means you won’t manage your privacy and security risks.

Vendor management is also a key part of privacy because it provides visibility into how much personal information your vendors have access to. This can help you identify any gaps in data protection and retention policies that need to be addressed before they become issues (and expensive fines).

You could miss important deadlines and opportunities, causing you to lose clients to competitors

Not prioritizing vendor management can mean missing deadlines and opportunities, which costs your business money and puts you at risk of losing clients. If you lose a client, someone else will be happy to take their place, but if they go somewhere else, it’s unlikely they’ll come back.

Vendor management is a critical part of business operations that can’t be overlooked or taken lightly. When executed effectively, it can help your company:

  • Establish relationships with key vendors and partners
  • Maintain positive relationships with vendors through ongoing contact and collaboration
  • Improve procurement processes by leveraging data analytics

Getting your vendor management under control is a critical part of business operations. One thing that can cause you to lose clients and opportunities is ineffective procedures for dealing with vendors. Fortunately, many tools are available to make your job easier—you just need to find the right ones.

Vendor management can be hard work, but it’s worthwhile to keep your clients happy and avoid costly mistakes.

You’ll lose control over vendor personnel changes that directly affect you, leaving you with someone you didn’t hire in the first place

The vendor will be able to hire, fire, and promote people as they see fit. If this occurs, you can’t control who is on your team. This can result in miscommunication between the two groups when trying to resolve issues because of personality clashes or lack of understanding about processes. It also means that if someone leaves their company unexpectedly (perhaps due to a layoff), they may not be up-to-date with project details and best practices anymore.

To avoid having too many cooks in the kitchen, it’s important to ensure that vendors do their part to stay on top of personnel changes. If they aren’t open about what’s going on with employee turnover or promotions within their company, you could be left without control over how things turn out.

Lack of control can also lead to major problems if you lose trust in your vendor because they’re not being transparent. This might be a good time to re-evaluate the relationship. If you don’t get an explanation for why changes are being made without your input, then maybe another company would be better suited for handling this project.

They may not share information about their own performance (or lack thereof)

Imagine a scenario where you’ve been working with the same vendor for a long time. You’re both on good terms, and they always seem available to help whenever you need it. But one day, things start going wrong—deliverables are late, and deadlines are missed. Now, imagine that you never knew about these issues until one of your competitors told you about them during an interview.

It’s easy to avoid this problem if you’re actively communicating with your vendors regularly. This means checking in at least once per month (if not more). The more you communicate, the less likely a problem will go unnoticed.

If you don’t prioritize vendor management, vendors may not share information about their performance (or lack thereof).

For example, if a vendor is having trouble meeting deadlines and missing deliverables, they probably won’t tell you about it—unless you ask them to. If you’re not asking them questions or proactively checking in with them to see if there are any issues, then they’re under no obligation to tell you anything.

If you have multiple vendors, they could end up working at cross purposes, creating more problems than they solve

Working with multiple vendors is a great way to streamline your business and reduce costs. The more people you have on the team, the more opportunities there are for miscommunication and other problems. For example, suppose one vendor is in charge of delivery while another handles customer service. In that case, they may not be able to communicate effectively with each other if their workflows don’t align perfectly. This can lead to costly mistakes—and even worse, huge issues.

If your vendors aren’t aligned with one another or working together efficiently, it could also impact productivity by creating bottlenecks where there previously weren’t any before. When these problems occur within an organization that relies heavily on good communication between departments, things can go south very quickly.


Vendors are an important part of your business, whether you have just one or many.

If you don’t take the time to set up a process for managing them, then you risk losing control over your own business and falling out of compliance with regulations.

The best way to avoid these issues is by prioritizing vendor management from day one—and that means creating policies, procedures, and tools that make it easy for everyone involved in the process.

February 2, 2023