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Best practices in vendor risk and compliance management need to be inculcated by vendors who deal with them because of the enormous risk their activities carry. Implementation of best practices in vendor risk and compliance management goes a long way in checking risks and with it, the adverse fallouts of a vendor management program.
First of all, why do organizations have a vendor partnership? It is because this kind of arrangement helps them to take care of their logistics and other aspects of their business in a much more streamlined and economical fashion, and this in turn helps them to concentrate and focus on their core business better. A strategic vendor partnership helps organizations manage their products and services better, and more economically. The root to this is inculcation of best practices in vendor risk and compliance management.
The importance of best practices in vendor risk and compliance management can be understood from the fact that when companies outsource their operations, or particular parts of them, or some of their activities, this does not include organizational responsibility. So, the onus of ensuring compliance with regulatory guidelines and making sure that the vendor has implemented best practices in vendor risk and compliance management lies squarely with the organization that outsources.
Burden is on the organization that hires vendorsThis places a heavy responsibility on them, since of late regulatory guidelines for best practices in vendor risk and compliance management have become all the more stringent. While outsourcing part of their activity or operations or logistics or even parts of product development to vendors; companies have to be very sure that they are in tune with best practices in vendor risk and compliance management.
The basis to implementing best practices in vendor risk and compliance management is to get a clear comprehension of vendor responsibilities. Many organizations make the mistake of assuming that best practices in vendor risk and compliance management need to be implemented only at the stage of selecting the vendor. This is disastrous thinking, because selection of the vendor is just the beginning of the outsourcing program. These organizations have to make sure that best practices in vendor risk and compliance management is a continuous program and activity, and hence utmost care has to go into managing them at all times.
Reasons for increased need for implementation of best practices in vendor risk and compliance managementThe need for adaption and implementation of best practices in vendor risk and compliance management has become all the more acute and necessary in view of the following factors:
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