Vendor Management SOP for Retail & E-commerce

# Vendor Management SOP - Retail & E-commerce

## Purpose
Implement to maintain productive vendor relationships, control costs, and ensure suppliers meet your quality and compliance standards.

## When to Use
A procedure for onboarding, evaluating, managing, and offboarding vendors including performance reviews, contract management, and dispute resolution.

## Instructions
1. Review the template below and familiarise yourself with the structure
2. Replace all [bracketed placeholders] with your retail & e-commerce business details
3. Customise the tone and formatting to match your brand
4. Save in your preferred tool (Xero or Airtable)

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## Vendor Management Standard Operating Procedure

### 1. Purpose and Scope
This SOP defines the standard procedures for onboarding, managing, evaluating, and offboarding vendors and suppliers. Effective vendor management controls costs, maintains quality, reduces risk, and ensures compliance with regulatory requirements. This procedure applies to all vendors providing goods or services to the business, including contractors, consultants, and SaaS providers.

### 2. Roles and Responsibilities
- **Procurement/Operations Manager:** Owns the vendor register, conducts performance reviews, and manages vendor relationships.
- **Finance Manager:** Manages vendor payment terms, reviews pricing, and handles billing disputes.
- **Department Managers:** Evaluate vendor performance for their area and raise new vendor requests.
- **Director:** Approves new vendors over $10,000 annual spend and approves vendor terminations.

### 3. Prerequisites
- Vendor register maintained in Airtable
- Vendor onboarding checklist documented in Notion
- Xero configured with vendor payment records
- Annual vendor review schedule set in Asana

### 4. Procedure

**Step 1: Vendor Onboarding**
Before engaging any new vendor:
1. Complete the vendor assessment: business registration (ABN verification via abr.gov.au), insurance certificates (public liability, professional indemnity), relevant licences and certifications
2. Collect vendor details: legal entity name, ABN, contact information, bank details (for payment setup), payment terms preference
3. Execute a vendor agreement or terms of engagement
4. Set up the vendor in Xero with correct payment details and GL coding
5. Add the vendor to the Vendor Register in Airtable with: company name, primary contact, service category, contract value, contract start and end dates, and review dates
6. Share relevant policies with the vendor: code of conduct, WHS requirements, confidentiality expectations

**Step 2: Manage Ongoing Relationships**
For active vendors:
- Maintain regular communication through the designated contact person
- Ensure purchase orders are raised before ordering (no verbal-only commitments)
- Monitor delivery performance against agreed timelines
- Track quality of goods or services received
- Manage contract renewals proactively (begin review 90 days before expiry)
- Keep the Vendor Register in Airtable updated with any changes

**Step 3: Conduct Performance Reviews**
Review each vendor annually (or quarterly for vendors over $50,000 annual spend):

Score each vendor against the following criteria (1-5 scale):
- Quality of goods/services delivered
- On-time delivery performance
- Pricing competitiveness
- Communication and responsiveness
- Problem resolution speed
- Compliance with agreed terms
- Invoice accuracy

Record scores in Airtable. Share the review summary with the vendor, highlighting strengths and areas for improvement. For vendors scoring below 3.0 overall, develop an improvement plan or begin sourcing alternatives.

**Step 4: Handle Disputes and Issues**
When a vendor issue arises:
1. Document the issue in Airtable with full details
2. Contact the vendor within 2 business days with a clear description of the problem
3. Request a corrective action plan with timeline
4. If the issue involves a financial discrepancy, involve the Finance Manager
5. If the vendor fails to resolve the issue within the agreed timeframe, escalate to the Operations Manager
6. Maintain a dispute log for reference in performance reviews

**Step 5: Manage Pricing and Costs**
- Request and review pricing annually, benchmarking against market rates
- Negotiate volume discounts where spend justifies it
- Review and challenge any price increases (request justification)
- Take advantage of early payment discounts where cash flow allows
- Track total spend per vendor in Xero for budget reporting

**Step 6: Vendor Offboarding**
When discontinuing a vendor relationship:
1. Review contract terms for notice periods and termination clauses
2. Provide written notice per the contract requirements
3. Ensure all outstanding orders are fulfilled or cancelled
4. Settle all outstanding invoices
5. Return any vendor-owned property or intellectual property
6. Update the Vendor Register status to "Inactive" in Airtable
7. Remove payment details from Xero (or mark as inactive)
8. Document the reason for termination for future reference

### 5. Compliance Requirements
- Verify vendor ABN annually (abr.gov.au)
- Collect updated insurance certificates annually
- Ensure contractors meet independent contractor criteria (not sham contracting)
- Verify subcontractor licences for regulated industries (building, electrical, plumbing)
- Maintain modern slavery compliance for vendors over $100M revenue (if applicable to your supply chain)

### 6. Revision History
| Version | Date | Author | Changes |
|---------|------|--------|---------|
| 1.0 | [Date] | [Author] | Initial release |

### 7. Related Documents
- Vendor Register (Airtable)
- Vendor Onboarding Checklist (Notion)
- Vendor Evaluation Workflow
- Purchase Request Workflow
- Standard Vendor Agreement Template

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**Complexity:** intermediate | **Setup time:** 20 minutes | **Tools:** Xero, Airtable, Notion

Note: This template has been tailored for retail & e-commerce businesses in Australia. Adjust terminology and compliance references to match your specific context.