Categorize Suppliers To Enhance Business Value

As companies shift their technology spend into areas that attract, serve, and retain customers, sourcing and vendor management (SVM) professionals find themselves in the crosshairs of digital disruptions. As a result of the growing demand for business technology, companies depend more and more on external technology suppliers and struggle with an increasing volume of contracts and vendors. This is creating significant challenges. Since experienced resources are scarce, and budgets for SVM organizations are small, a company must focus its sourcing and vendor management resources on the contracts and relationships that deliver the biggest value for its business. This means the traditional methods for supplier categorization (primarily spend-per-vendor) are less relevant than new methods that focus on business value and market substitutes. This report describes the key criteria for categorizing vendors and how to use the results of such categorization to align organizational efforts.