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Vendor Management

Why Employers Care

For large employers, effective management of their vendors is critical to ensuring effective service delivery, useful data analytics/reporting and cost savings. When vendor management is ignored, it can result in poor service, incomplete metrics for program monitoring and wasting of the employers' dollars.

What Can Employers Do?

Leading employers successfully use their purchasing power with vendors to improve the quality and efficiency of services received by employees. Successful vendor management includes:

  • Conducting RFPs every three to five years
  • Effectively negotiating contract terms from defined goals and objectives
  • Measuring and monitoring performance on a regular basis
  • Including performance-based financial incentives/penalties into contracts
  • Auditing vendors every two to three years

Recent trends in vendor management include consolidating program services and service integration. By consolidating programs with one or two vendors, employers hope to gain further price discounts, ease program administration and better leveraging of programs. Service integration allows employers to improve data sharing between vendors and make the services more easily accessible to employees.

Page last updated: September 14, 2012

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