What is Vendor Dependency Index?
The Vendor Dependency Index measures how critical a specific vendor is to the operations of a business, based on the number of tools they provide and their integration into business processes.
Why it Matters
Understanding vendor dependency helps businesses manage risk by highlighting which vendors are essential to operations. A high dependency on a single vendor can increase the risk of disruptions due to service issues or contract changes.
Benefits
- Measures criticality of a vendor to business operations
- Highlights risks of vendor dependency
- Helps manage vendor diversification strategies
- Supports risk management in vendor relationships
