This is a quick walk through of an example of setting up a vendor with vendor portal access. The contact you initially setup would then be considered the admin for that company which would allow them to setup other people in there organization to administrator the relationship through the portal for example manage invoices. The vendor portal has been in AX for a number of version but incrementally features have been added especially in AX2012 with the procurement and sourcing functionality improvements, which were also improved in R3 for RFQ processes.
There is a lot of technology at play here relative to how you administer the users accounts. In AX2012 when it was released it supported claims based authentication which is configured in SharePoint. In R3 support was added to allow you to use Azure Access Control to be the gateway to identity providers like Windows Live, Google, Yahoo etc. As well there were improvements made in R3 CU8 for improving the workflow of the user add which you will see in this example with the authentication steps in the workflow.