Vendor Assessment

The four key components of Strategy Analysis are principles, practices, techniques, and skills. They play an essential role in identifying and validating the organization’s strategic needs, defining suitable solution approach(es) and solution(s), and planning, monitoring, and engaging stakeholders to achieve the organization’s strategic objectives. Techniques describe a step-by-step approach to conducting Strategic Analysis activities.

Need to analyze vendors and evaluate their performance? Here is a Strategy Analysis technique to achieve that. This blog will look at a technique called Vendor Assessment with examples.

History of Vendor Assessment as a strategy analysis technique 

The concept of vendor assessment has been around for centuries. In the past, it was used mainly for assessing the quality of goods purchased from a vendor. As the world of business evolved, vendors became more complex, and the need for a more comprehensive assessment became evident.  Check for cbap training course at adaptiveus e learning website 

The first formal framework for vendor assessment was developed in the 1970s. This framework was created by the International Organization for Standardization (ISO). This framework was designed to help organizations evaluate vendors in a systematic way. The ISO framework includes criteria such as quality of product, delivery time, price, and customer service. 

In the years since the ISO framework was created, vendor assessment has become a widely used tool for analyzing vendors and evaluating their performance. Today, organizations use vendor assessment to measure the quality of goods, services, and processes from vendors. The assessment also helps organizations determine the best vendors for their specific needs. 

Organizations use vendor assessment to make more informed decisions about their vendors. The assessment helps organizations evaluate the capabilities of vendors and determine if they are the right fit for their needs. In addition, the assessment can help organizations compare vendors and select the best one for their needs. 

Vendor assessment is an important tool for organizations looking to optimize their supply chain and make sure they are working with the best vendors. By using vendor assessment, organizations can make sure they are getting the best value for their money and that their vendors are providing quality products and services.


Helps to assess the ability of a potential vendor to meet commitments with respect to the delivery and consistent provision of a product or service. 


Ensure that the supplier is financially secure, capable of maintaining specific staffing levels, committing appropriately skilled staff to support solutions, etc. NFRs can be used to define service levels (SLAs) expected of a third party. 

Assess vendors formally using Request for Information (RFI), Request for Quote (RFQ), Request for Tender (RFT), or Request for Proposal (RFP). 

  • RFI: The intent is to get information. Open to multiple solutions. 
  • RFP: The intent is to get a proposal when the scope is understood. 
  • RFQ / RFT: Solution is defined. Get the price. 

Steps for vendor assessment 

Determine the knowledge and expertise to be transferred and the method of execution. Consider vendors to provide knowledge and expertise not internally available. 

Choose licensing and pricing models. 

Solutions with similar functionalities may differ greatly in licensing models. Analyze different usage scenarios to determine which option will provide the best benefit-to-cost ratio. 

Determine product reputation and market position 

Compare each vendor with competitors and decide with which player organization wants to get involved. 

Determine terms and conditions 

Determine if services provided by the vendor are temporary or permanent. Consider challenges in the vendor’s licensing terms and technology while transitioning to another vendor. 

Consider the vendor’s use of and responsibility for protecting the integrity of the organization’s confidential data and customization terms for the product. 

Determine vendor reputation 

The vendor’s experiences with other customers provide valuable information on how likely the vendor will be able to meet its contractual and non-contractual obligations. Evaluate vendors for conformance and compliance with external relevant standards for quality, security, and professionalism. 

Determine vendor stability 

Determine the vendor’s ability to provide required services in the future. Mitigate risks with respect to vendor’s financial difficulties. Ensure to maintain and enhancement solutions even if the vendor’s situation changes radically. 

Usage considerations

It could be time-consuming, but it helps in deciding on a suitable and reliable vendor which satisfies the needs of the company and helps in delivering and supporting the company’s products and services.

Advantages of Vendor Assessment as a strategy analysis technique

1. Improved Vendor Performance: Vendor assessments allow businesses to track vendor performance and identify areas for improvement. This can help companies identify potential issues before they become a problem, as well as allow vendors to improve their performance and provide better service. 

2. Cost Savings: Vendor assessments can result in significant cost savings for businesses as they can help identify areas where vendors can improve efficiency and reduce costs. 

3. Increased Efficiency: Vendor assessments can provide valuable insights into areas of improvement, allowing businesses to streamline processes and increase efficiency. 

4. Risk Management: Vendor assessments can help to identify potential risks and vulnerabilities associated with suppliers and vendors. This can help to ensure that the right vendors are chosen and that risks are mitigated before they become an issue. 

5. Improved Quality Control: Vendor assessments can help to ensure that quality control is maintained throughout the supply chain. This can help to ensure that products meet the required standards and that customers receive the best possible service.

Weaknesses of Vendor Assessment as a strategy analysis technique 

1. Vendor Assessment may be a time-consuming process. It requires a considerable amount of effort and resources to analyze the various vendors in order to determine the best option. 

2. Vendor Assessment may not provide an accurate analysis of the vendor’s capability. It is possible that some vendors may be able to perform well in certain areas but not in others. 

3. Vendor Assessment does not always provide visibility into the vendor’s long-term performance. The long-term stability and reliability of the vendors can only be determined through ongoing performance evaluation. 

4. Vendor Assessment can be expensive, as it requires the purchase of services or products from the vendor in order to assess their capabilities. 

5. Vendor Assessment can be biased if the assessor has a vested interest in the outcome. This can lead to inaccurate assessments.

Relationship of Vendor Assessment with other strategy analysis techniques 

Vendor assessment is an important part of any strategy analysis technique. It is used to identify and evaluate potential vendors and suppliers for a company. It helps companies to determine the best vendor for their needs and make sure that the vendor meets all of their requirements. 

Vendor assessment can be used in conjunction with other strategy analysis techniques such as Porter’s Five Forces, SWOT Analysis, and Value Chain Analysis. All of these techniques can help companies to gain a better understanding of their industry and the competitive landscape, which can be used to make informed decisions about the vendors they choose to do business with. Vendor assessment also can help companies to identify potential risks associated with working with a particular vendor and assess the overall value of a vendor.

Future of Vendor Assessment as a strategy analysis technique 

Vendor assessment as a strategy analysis technique is likely to remain a key part of the decision-making process for organizations looking to purchase goods and services. The technique allows companies to gain insight into the capabilities and risks associated with potential vendors and helps them to make informed decisions. 

As technology continues to evolve and new tools become available to help organizations evaluate potential vendors, the methodology of vendor assessment is likely to become more sophisticated. In addition, the use of AI and machine learning will likely become more commonplace in the vendor selection process, helping organizations to quickly and accurately compare vendors to determine which one is the best fit. As organizations become more focused on sustainability, vendor assessment will also become an important tool in ensuring that suppliers are meeting environmental and social standards. Finally, as companies look to expand their supply chains and work with more global vendors, vendor assessment will be an essential tool to evaluate the capabilities and risks of vendors in different countries and regions.