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Better vendor management starts before a contract is signed and continues through delivery, performance reviews, problem-solving, and exit planning. Procurement guidance often calls this work supplier management or supplier relationship management. The right approach is proportionate: give critical, complex, or risky contracts more active oversight than clearly specified, lower-risk work.
1. Set up the relationship before awarding the contract
Define what the organization needs, what outcomes it expects, who owns each responsibility, and how the parties will communicate. Consider delivery and relationship risks while developing the contract—not only after a problem appears. CIPS distinguishes contract development before award from supplier relationship management after award and recommends planning for exit in advance. CIPS, “Managing suppliers”
Agree how the relationship can end, including relevant handover needs and responsibilities, and discuss that plan with the supplier. Exit planning is a normal part of managing a contract, not a signal that either party expects it to fail.
2. Match oversight to the vendor’s risk and importance
Do not give every supplier the same meeting schedule, reporting burden, or escalation process. The World Bank’s 2017 contract-management guidance recommends calibrating effort to factors such as criticality, supplier positioning, the contract’s nature, size, complexity, risk, and value. That is procurement guidance, not a universal legal rule. World Bank, “Guidance – Contract Management” (2017)
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- Lower-risk, clearly specified work: Use simpler controls and periodic checks focused on whether the supplier meets the agreed requirements.
- High-value, critical, complex, or uncertain work: Use more active oversight, closer coordination, and clearer routes for decisions and escalation.
In practice, compare contracts by their value and criticality, delivery and supplier risk, complexity, clarity of requirements, and the collaboration needed to deliver successfully. These factors help determine management effort; they do not imply that one scorecard or cadence fits every organization.
3. Agree outcomes, measures, and responsibilities in the contract
Set performance objectives and targets before signing. If using key performance indicators (KPIs), link them to the outcomes the contract is meant to achieve. The World Bank’s 2017 guidance says KPIs should be “SMART” indicators: specific, measurable, attributable, relevant, and time-bound.
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Make the management plan usable by recording milestones, responsible roles and contacts, relevant risks, and how performance will be assessed. If a measure affects incentives or payment decisions, agree it and include it in the contract before signature. Measures added later can create disputes about what was promised.
4. Track a small set of relevant measures with evidence
Choose measures that fit the goods or service. CIPS cautions that there is no universally applicable set of supplier-performance measures. Depending on the contract, useful indicators may include:
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- Delivery accuracy and lead time
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- Costs and compliance with agreed pricing
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Use objective records—such as delivery dates, defects, or pricing compliance—alongside feedback from customers and other stakeholders who experience the service. Keep scorecards current, and remove measures or reports that no longer help people make decisions. CIPS, “Supplier Performance – How to Manage Supplier Performance”
5. Communicate regularly and make reviews two-way
Set a communication rhythm suited to the contract’s importance and risk. Use reviews to discuss performance candidly, recognize what is working, and surface barriers. Ask the supplier what is making delivery harder—including whether the buyer’s own processes, decisions, or delays are contributing. CIPS guidance emphasizes openness and feedback in supplier relationships. CIPS, “Managing suppliers”
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Two-way reviews make it easier to distinguish a supplier performance issue from a process problem on the buyer’s side. Record decisions, owners, and follow-up dates so that discussion leads to action.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.6. Turn reviews into improvement, escalation, or exit
Use contract appraisals to identify missed requirements and give specific feedback. When performance needs to improve, agree corrective actions, owners, and check-in points. For important contracts, establish governance and escalation routes before a conflict occurs. The World Bank’s 2017 guidance includes delivery, support, quality, partnership, governance, risk, compliance, financial management, and dispute resolution among example scorecard areas.
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If an issue cannot be resolved through routine management, follow the contract’s agreed escalation and dispute procedures. CIPS also recommends managing conflict and planning an exit where the relationship is not working. Keep decisions grounded in the contract and applicable organizational procedures; the cited guidance does not establish a universal legal process for every jurisdiction or contract.
How to put the six practices into a management plan
For each vendor, make the plan proportionate and practical. A short plan for straightforward work and a more detailed plan for a critical contract may differ in form, but both should make ownership and expectations clear.
- State the expected outcomes, scope, and material risks.
- Name the responsible contacts and decision-makers on both sides.
- List the contract’s milestones and the measures that matter.
- Specify what evidence will be reviewed and how often, based on risk and importance.
- Record communication, corrective-action, escalation, dispute, and exit arrangements appropriate to the contract.
The World Bank catalogue lists a global Contract Management Practice Procurement Guidance document dated June 10, 2024, authored by OPCS. That catalogue record establishes the document’s date, authorship, document type, and global scope; it does not by itself substantiate detailed recommendations beyond those in the 2017 guidance cited above. World Bank, procurement guidance catalogue
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