Policy, Program and Procedures

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  • 1.  Vendor Procurement Unit

    Posted 04-23-2021 09:59 AM
    Now that our organization has a Vendor Risk Management program in place, I have been asked to research forming a vendor procurement area. Currently the vendor selection process is decentralized. It is performed by the unit that identified the need to go outside the company.

    If you recently started (or shut down) a vendor procurement area, what was your decision making process? What skillsets are on your team? Is there a certain organization size where it makes the most sense to centralize the function?

    Thanks


  • 2.  RE: Vendor Procurement Unit

    This message was posted by a user wishing to remain anonymous
    Posted 04-23-2021 10:49 AM
    This message was posted by a user wishing to remain anonymous

    ​We are a $50B commercial bank and we are also looking into developing a procurement function, but have not really found the need to add the bureaucracy of a separate department.  Currently, we have 3 employees within TPRM dedicated to help review and negotiate contracts (any contracts larger than $xxxxx, entails access to or hosting NPI, multiyear contracts, IT contracts, etc.).  This group was dedicated to contracts because Business Units usually don't have the experience working with contracts, the hidden meanings/interpretation/unintended consequences within contract language, and is biased/blinded to engage a vendor to solve all of the business unit's problems.  These dedicated employees are not attorneys but work very, very closely with our Legal Department to ensure all of the mandatory clauses deemed critical to our bank are included in the contract (e.g., right to audit, no exclusivity clauses, we only start paying licensing fees once the software has been installed and working, break up fees and conditions, etc.).  We embed this group within TPRM so that they have visibility to whether multiple business units are using a common vendor; thus enabling us to negotiate a global master agreement or get volume discounts. We only started this three years ago so we are not sure if the cost savings are from low hanging fruit or will continue to pay for itself going forward.  As of today, the group more than pays for itself in cost savings, is generating better and more standardized contracts, and make the bank safer overall from a contractual perspective.