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VENDORCOMPLIANCE.INFO

Specializing in EDI and vendor compliance for manufacturers, distributors, &  retailers.

What Is "Vendor Compliance"?

First, what is a "vendor"? 

A vendor is a company who supplies products to other companies, more commonly known as "customers".  (In EDI terminology, customers are referred to as "trading partners".  This is because you trade electronic documents to conduct business.)

So.....why are there vendor compliance rules?

Imagine being a customer, such as a major retail store, that has hundreds, if not thousands, of vendors supplying all sorts of merchandise.  Without a common set of rules governing how all of those vendors must conduct business with the single customer, the customer's overall business operations, (purchasing, receiving, inventory control, accounting, etc.)  would be chaotic at best.  The inefficiencies of operation would have to be passed onto the retail consumer, resulting in higher prices for the goods we purchase.

Thus, "vendor compliance" are the rules by which vendors will conduct business with their customers.  Vendors do not typically have a say in the rules of vendor compliance; they are set up by the customer.  As such, vendor compliance rules help companies streamline and standardize their internal procedures for dealing with vendors, but the vendors must make adjustments to their operations to react to their customer's requests.

The difficulty for vendors is not just complying to one customer's set of rules, but when they have to meet the (different) rules of several or many customers.  Even though there are general and standard guidelines for these rules, (i.e. EDI standards), the guidelines allow enough flexibility within them that each customer really will have their own unique set of vendor compliance rules.  The vendor must find the way, within their internal operations procedures and computer systems, to satisfy all these different customer rules while conducting business.

Vendor compliance rules can be very difficult, and expensive, for a company to implement.  Certainly the overhead of additional procedures, computer systems, and personnel increases the cost of goods sold.  A vendor may consider raising the prices of its goods or services to compensate for the added costs of vendor compliance.