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In any business, the time comes when outside help is needed. From outsourcing activities like IT and payroll to hiring specialists for a specific project, having access to quality vendors is a must.
In order for everything to work seamlessly, it is crucial to keep your business relationships stable, transparent, and in one place. With your business growing and the number of vendors increasing, it is hard to be up-to-date without the right vendor management solution.
For example, say your manufacturing company’s vendor doesn't get paid, or the payment is late for a critical component of your product.
That component didn't ship, and now you are missing an essential part of the entire assembly process and bringing your production line to a halt. Your business is losing money, time, and your most valuable resources.
This is why keeping your vendor relationships is so important - you need to build better trust, treat all your vendors equally and maintain efficiency for your business contacts.
Don’t let vendor management get lost in the day-to-day shuffle.
If you’re asking yourself, “what is vendor management?” you’re not alone. Many business owners automatically go with the same vendors they’ve used for years. They are comfortable with those vendors. But what happens when their contract expires? What if their cost increases, making your business either take the financial hit or increase your prices? We can’t always predict when these things will happen, but we should be prepared.
Let’s take a look at what vendor management entails and how to choose the right software solution for your business.
When we talk about vendor management systems, we need to remember that not all are created equally. Some may be better suited to your specific industry than others. What is a vendor management system good for if it doesn’t compliment the systems that are already working for you? To give you a better understanding of what goes into this decision, we’ll cover the following:
Managing vendor relations is an essential part of keeping relationships strong. When people drop the ball or feel they are being treated unfairly, that connection might suffer. Proper vendor management is critical in keeping the relationship healthy.
There are many different types of vendor management systems available on the market today, but there are three key functions that are common to the majority of them. Those functions are vendor engagement, project management, and payroll management. These three buckets encompass the vendor lifecycle from start to finish and are essential to good vendor management.
When you find yourself browsing that long list of vendor management system examples, make sure the ones you are considering tick off these three items. Doing so will ensure the software is robust enough to handle your needs. Remember, vendor management software pricing isn’t nearly as important as functionality.
As you search for a viable solution to your needs, you’ll find that some would probably work well, while others are not built for your industry. The vendor management software market is flooded with options. How can you tell which ones are suitable for your needs?
If you’ve already got a vendor management process that your organization follows, that’s a good place to start. You’ll get the most value out of a solution that easily adapts to your current workflow. So, know your business and its needs: once you outline and document your processes, you’ll have a better idea of what you are looking for.
You’ll be able to automate your vendor management in ways you never thought were possible. Vendor database management will be easier with only one database to manage.
Your IT vendor management will be in the same system as your creative vendors as the platform is used across departments. When you start getting excited about specific features, you'll know which ones will make the most significant impact.
Another critical component is to identify weaknesses in your current processes. Identifying stumbling blocks and pain points will help you make the most out of the vendor management system features that are on the market. This is a surefire way to visualize the value that comes with a VMS.
Getting the value you want out of a VMS comes down to implementation. Your vendor management goals and objectives might evolve once you learn about all the software features you’ll have at your disposal.
A vendor management solution for financial institutions will look different than healthcare vendor management software. This is an easy distinction. They won’t do you much good if you are looking for a vendor management system for small businesses. You’ve got to find something geared toward your needs.
Once you’ve narrowed your choice to solutions that are tailored to your industry, how do you whittle them down and figure out which will work for you? The best vendor management software is the one that works best for you, so let’s take a look at how you determine which one that is.
If you’ve got a good handle on what your current processes look like, this shouldn’t be difficult. When you compare your list of wants with the features each software package offers, you’ll see the bigger picture emerge. The following checklist is an excellent roadmap to help prompt the questions you’ll need to ask yourself.
Our solution, M-Connect, checks all the boxes and offers numerous options such as virtual data rooms, Stakeholder Portals, application processing, and more.
M-Connect is a versatile, configurable, and customizable platform to suit your industry. It’s incredibly flexible right out of the box, allowing it to be a powerful VMS that’s as unique as your business. M-Connect solves your pain points, providing incredible value almost immediately. The system is configurable with out-of-the-box widgets, so you can create a workspace that makes sense for the way you work internally and with vendors.
Learn more about M-Connect by watching this video:
To get the most value out of your purchase, you’ll want to make sure you follow vendor management best practices. By implementing and sticking with them, you’re much better positioned for success.
Vendor management is not a new concept; it’s relationship maintenance. The more direct and transparent the interaction is, the deeper the connection. Investing in a vendor management system is an investment in your working partnership. Choosing a system with a vendor portal gives you the credibility and leverage to find reliable business partners who are happy to work with you, and having solid vendors at your disposal is a lifesaver. A vendor management system (VMS) like M-Connect is a great way to get started.
Vendor management may be best handled in the same way you’d handle a regular relationship. Choose vendors you believe in. Commit to them for the long term. Keep things transparent, and make sure no one is getting the short end of the stick. Mutual respect and understanding go a long way.
Since you may be dealing with dozens of vendors or more, it’s important to have a management plan for working with them. Create a plan to vet potential vendors ahead of time whenever available. This ensures your vendors perform quality work at a fair price. Keeping lines of communication clear helps outline the scope of work. Getting it in writing supports your goals, incentives for early delivery, and possible damages for delays visible to everyone working on the project.
While they are essentially the same thing, procurement professionals are generally more concerned with the client’s bottom line, and vendor management professionals focus on developing the client and vendor’s working relationship. The difference lies in the execution.
Vendor empanelment involves the creation of a panel of vendors who may be suitable for any given task. Creating this panel gives you the advantage of getting vendors up to speed on a project before awarding the contract.
Before doing business with a vendor, a vendor record must be created within the vendor maintenance program. Once that record has been created, you can issue purchase orders and pay invoices to that vendor.