Vendor Management Software Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The Vendor Management Software Market is expected to grow at a CAGR of 14% over the forecast period. Vendor management involves initiating and grooming the relationships with the suppliers of the goods and services a buyer needs for day-to-day operations.

Key Highlights

• The increasing need for reducing risks and making faster decisions paved the way for vendor management software to be integrated with the Vendor Management Software Market.
• The lack of availability of vendor information and vendor performance exposes the company to increased supply risk. It prevents the company's ability to act proactively in dire situations, making it imperative for them to look for solutions like VMS that could navigate them through such situations, fueling the growth of the VMS throughout the forecast period.
• Additionally, the growing adoption of cloud-based software due to government initiatives are expected to drive market growth. For instance, the DOD intends to invest around USD 38.6 billion in unclassified IT in the fiscal year 2022. OMB mandates that agencies update, phase out, or combine their portfolios of software programs to promote cloud usage.
• The increasing need to minimize administrative costs is one of the crucial factors that could drive the VMS market growth over the forecast period. Also, the regulated companies must ensure that the third-party goods and services comply with applicable laws, regulations, and best practices making VMS a necessity for such companies.
• However, the high implementation and maintenance cost is one such factor that could play a vital role in hindering the VMS market growth over the forecast period.
• Organizations had several challenges managing suppliers during the COVID-19 pandemic, as worldwide supply chains were interrupted due to strict restrictions and lockdowns enforced by governments worldwide. Industries that were heavily impacted by the crisis, such as banking and finance, manufacturing, energy, and retail and consumer goods, witnessed a decrease in the usage of vendor risk management systems.

Vendor Management Software Market Trends

Retail Sector is Expected to Hold the Largest Share

• The retail industry depends on many third-party vendors and suppliers for their inventory. It makes retailers prone to many risks. Therefore it becomes imperative for these retailers to look for solutions that help them mitigate such risks. It is expected to boost the vendor management software market demand over the forecast period.
• Quantivate's supplier and vendor management for retail allow retailers to identify potential supplier risks, verify that suppliers are compliant, and continue to monitor changes that can create new chances.
• The companies in the industry are involved in various strategies to maintain their market position. For instance, in August 2022, Volt Systems, a digital firm that offers suppliers more on-demand access to merchandising resources, was acquired by Walmart.
• The increasing trend in retail sales makes vendors serve their customers better, and maintaining healthy relationships with their suppliers is equally important. Vendor management software allows the vendor to satisfy both parties, fueling the demand for the VMS over the forecast period.
• The fluctuating market conditions and consumer trends are responsible for the varying Product pricing and promotion, which makes it essential for retailers to adjust and adapt to such changes quickly. The VMS helps retailers achieve this need, boosting the market's growth over the forecast period.

North America is Expected to Hold Significant Market Share

• The region includes a well-established distribution channel for all retail companies, making it imperative for the vendors to effectively and efficiently manage the entire distribution channel. VMS provides a perfect solution to the question.
• The US retail industry is undergoing two significant transitions, one being the technological and the other being the result of the changes in consumer behavior. It is expected to boost the demand for VMS in the region over the forecast period.
• According to The US Census Bureau, total retail sales at the end of 2021 were roughly 6.6 trillion dollars, an increase of around USD 1 billion from the previous year. This increase is expected to fuel the VMS growth in the region throughout the forecast period.
• The government's increased funding of SME development is anticipated to fuel the demand for vendor management software. For instance, in August 2022, the US Department of Treasury approved an additional batch of four state proposals for up to USD 750 million in funding under State Small Business Credit Initiative (SSBCI). Treasury announced financial approvals totaling more than USD 2.25 billion to support small company growth through SSBCI.
• With banking and financial institutions relying on third-party vendors for many of their operations, it becomes essential for these institutions to embrace a robust third-party vendor management program that helps them assess, measure, monitor, and control such risks. Some of the prominent players in the region are providing software solutions that help these institutions mitigate or terminate such threats, thereby boosting the market in the area. For instance, Ncontracts LLC's Nvendor enables financial institutions to achieve and maintain regulatory compliance with third-party vendor regulations and guidance.

Vendor Management Software Market Competitor Analysis

The competitive rivalry in the vendor management software market is high owing to the presence of some key players like IBM, SAP SE, and many more. Their ability to continually innovate their offerings according to the needs and wants of the market allowed these players to gain a competitive advantage over their competitors. Strategic partnerships, mergers, acquisitions, and hefty research and development investments have allowed the market players to gain a strong foothold.

• August 2022 - Volt Systems, a software firm specializing in vendor management and product monitoring, was acquired by Walmart. According to a news statement from the company, Volt System's staff, technology, and client contracts will get transferred to Walmart as part of the transaction.
• November 2022 - Cloud5 Communications, a primary provider of technology and communications solutions to over 5,000 MDUs, hotels, and commercial buildings throughout the Americas, announced the release of its vendor Management system. Vendor Management uses the Project Management Office for Cloud5's extensive experience.
• July 2022 - TD SYNNEX announced the opening of its Independent Software Vendor (ISV) experience. The ISV experience is created to aid in accelerating Software-as-a-Service (SaaS) possibilities in the channel by leveraging the ecosystem of TD SYNNEX partners to power IT operations, automate challenging tasks and introduce new features and functionality. It is to increase sales, improve go-to-market strategies, and produce successful business outcomes.

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• The market estimate (ME) sheet in Excel format
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