3 Types of Vendor Management Solutions Your Organization Needs
Traditional “minding and monitoring” vendor management solutions are a huge waste of time and money. You can’t integrate siloed vendor management processes like onboarding, qualification, and segmentation with other procurement processes.
Also, the process of acquiring and managing vendor data from multiple sources only adds to the inherent complexity and delays analysis. Manual efforts tend to delay critical vendor management decisions. The need to scale compliance and drive spend to preferred vendors demands a seamless alignment of vendor management functions with procurement.
Evolving business needs are forcing procurement leaders to reinvent their traditional vendor management practices, to avoid leaking value and money. According to Gartner’s Vendor Management Vision for 2019, nearly 63% of organizations are likely to change their business model in the next three years to face the uphill battle of their vendor management teams.
Can these tech-powered vendor management solutions offer the power organizations need? Are modern vendor management solutions an essential asset, or a wasteful spend? Let’s take a closer look.
What is a vendor management solution?
Vendor management solution is the comprehensive set of modules that automate the end-to-end vendor management process, from vendor qualification and onboarding to vendor rating and offboarding. These solutions integrate seamlessly with the existing procurement process to derive more value out of supplier relationships.
Benefits of using a vendor management solution
Vendor management software solutions allow organizations to collaborate effortlessly with their vendors, forge better relationships with them, and make insightful business decisions.
Automated vendor management solutions:
- Segment suppliers based on the value they offer and the risk they pose
- Make vendor collaboration effortless, and establish a good relationship
- Monitor and manage vendor performance without any human effort
- Accelerate vendor onboarding while enabling consistency
- Offer actionable insights to speed up the decision-making process
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Three types of vendor management solutions you need
As vendor management solutions continue to raise the bar, the margin of error within the process grows thinner and thinner. These vendor management solutions may either cater to a specific niche, or come as an all-in-one package.
What complicates things is that each vendor management solution has its own set of attributes. Since there are a variety of stakeholders involved in this process, there are diverging opinions as to which attributes are must-haves, and which ones could be traded off.
While a wide range of methodologies and terminologies are used to classify and segment these procurement tools, here are three types of vendor management solutions every organization needs:
1. Vendor engagement tools
Vendor engagement tools are designed to manage vendor relationships throughout active procurement cycles from initial contact to final closure.
Efficient vendor relationship management tools proactively improve relationships by offering an array of key benefits from enhanced quality to improved total cost of ownership (TCO) and increased transparency.
Vendor engagement tools like SMART by GEP let organizations actively integrate and collaborate with their suppliers in a transparent and structured way. They let businesses define action plans, assign stakeholders, and establish effective vendor engagement models through a number of focused, joint activities.
2. Vendor performance management
Maintaining updated information of a vendor’s performance throughout the contract period helps organizations spot weaknesses at individual supplier and supply chain level.
This process of tracking and managing supplier performance helps vendors manage and mitigate the inherent supply chain risks.
Kissflow Procurement Cloud helps you manage supplier performance qualitatively. It does this by allowing users to rate suppliers using key performance metrics like policy compliance, delivery quality, efficiency, and more. Further, it lets businesses track, monitor, and identify underperforming suppliers and initiate offboarding. This way supplier risk is mitigated even before it escalates as a risk.
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3. End-to-end vendor management
Vendor management involves two core areas:
- Vendor engagement, which involves establishing a relationship with suppliers
- Vendor performance management, which involves analysing vendor performance in order to mitigate potential risk proactively by making the right choice of vendor
A solution that covers vendor management comprehensively, taking care of both facets, is the right choice to make. Unlike siloed solutions that cover only an aspect of the supplier lifecycle management, a solution that comprehensively takes care of vendor management offers a complete spectrum of functionality required to extract maximum value out of vendors.
Features offered by competent vendor management solutions include:
- Faster vendor onboarding: Simplified registration and easy-to-use interfaces to enable suppliers to get started easily
- Paperless onboarding: RFX and other purchasing processes synced seamlessly with the vendor management module to eliminate manual effort and automate onboarding
- Quick vendor screening: Retrieve and verify supplier information like business reports, financial data, and credit risk using the vendor’s unique number
- Comprehensive performance analysis: a complete view of vendor performance data including order timeliness, regulatory compliance, and much more
- Corrective actions: When supplier performance slips up, businesses have the option to initiate a supplier corrective action plan (SCAR) or offboard them from the portal
If you are yet to start using vendor management solutions, you should start today.
Kissflow Procurement Cloud is a comprehensive solution for procurement, and its features cover vendor management end-to-end. By picking this flexible and powerful cloud-based procurement software solutions, you can create a comprehensive vendor management process.
If you’re on the lookout for a vendor management tool, take advantage of Kissflow Procurement Cloud. Get a free demo today and see how easy this crucial procurement process can be!