Vendor management is one of the most complex and sophisticated processes in the whole of the procurement process. It can seem simple when the number of vendors is small, but the complexity ratchets up as the number of vendors and purchases gets higher.
The whole herculean task could be simplified by using a powerful vendor management software to manage, monitor, and engage vendors efficiently. But with the wide array of vendor management products in the market today, which should you choose?
To select the perfect vendor management solution, organizations need to determine their specific business requirements and identify what functionalities they need in order to coordinate better with their vendors and to save costs.
Here’s all you need to know to select a powerful vendor management process.
Vendor management is the process of analyzing, segmenting, and managing suppliers and is an integral part of the procurement process. The vendor management process optimizes the way an organization interacts and collaborates with its suppliers. A vendor management strategy is based on the specific business requirements of an organization and the value it desires to extract out of the relationship.
The vendor management ‘process flow’ refers to the steps involved in creating an effective relationship with suppliers. Here are the four steps involved in a vendor management process flow:
Getting the segmentation right is an essential part of the vendor management process. At this stage, you classify vendors based on a number of metrics like risk, profitability, total spend, the volume of transactions, quality of products, performance, and more.
Traditional vendor management practices focus on price negotiation. To unlock more value from a relationship, buyers need to broaden their focus. By working together with their suppliers, businesses can take costs and risks out of the bottom line while driving value and innovation to the top.
Organizations can execute their vendor management process efficiently by tapping into supplier capabilities to create mutual value. Buyers and suppliers can engage in activities like cost optimization, quality management, relationship building, innovation, and risk management.
The final stage of the vendor management process flow is about measuring performance to check whether you have bet on the right horses. Use your development plan to check your progress with the set targets. Discuss with your vendors improvement actions or plans to meet evolving needs.
A vendor management process, even an excellent one, is only as helpful as the available information enables it to be. By conducting vendor management with a dedicated application as part of a comprehensive procurement suite, an organization removes barriers to key information, empowers employees to make better-informed purchase decisions, and helps vendors execute their side of the contracts more effectively.
A vendor management application integrated with applications for contracts, purchase orders, and invoice approval gives every person on the project all the information and access they need to accomplish their part efficiently. Contracts are visible to both buyers and vendors, so all parties can easily reference the terms of the relationship. Past POs are easily referenced, duplicated, and adjusted as needed within the same digital workspace, and new POs are automatically populated with relevant vendor information, reducing human error and facilitating good communication with vendors.
Vendor management is a demanding process, but using your vendor management system shouldn’t be. A cloud-based vendor management application gives organizations the benefits of a robust system without the hassle of maintaining dedicated software. A cloud-based vendor management application:
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To be as beneficial as possible, your vendor management solution should include these features:
A good vendor management application will offer an easy-to-use interface to develop and visualize each supplier relationship. Even business users who don’t have coding expertise should be able to create and navigate a workflow easily.
You can’t do vendor management without forms. Users need the ability to build powerful online forms quickly with intuitive tools like a drag-and-drop form builder. The form builder must offer an exhaustive range of fields and a good collection of predefined form templates that users can choose from.
A cloud-based vendor management application gives buyers the ability to access their vendor management process from anywhere at any time. With guaranteed uptime and a centralized database, a vendor management process will be more efficient and streamlined when it lives in the cloud.
Your supplier relationship management software won’t work in a vacuum. It needs to interact seamlessly with the other procurement tools that are used by your business. Take a look at what systems your software needs to connect with, and then pick a compatible solution. Consider a vendor management application that’s already part of a unified procurement suite
Despite the undeniable benefits of the cloud, many businesses hesitate to fully embrace cloud technology due to security concerns. However, cloud-based vendor management software mitigates risk with features like conditional visibility, role-based access, and more.
Vendor management applications need powerful reporting features that help organizations stay on top of their operational metrics. Users ought to be able to retrieve the desired analytical insights on vendor performance, quality, and more whenever they want, with very little effort.
By properly segmenting your suppliers, collaborating with them regularly, and strategizing based on comprehensive insights, you can take your vendor management–and your business–to the next level.
With Kissflow, organizations can establish a smooth vendor management process, and an integrated procurement solution, with just a few clicks. Sign up today to get a free, customizable demo of how Kissflow makes vendor management–and the whole procurement process–a breeze.
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