For many companies, vendor management is treated as just another back-office function to be administered by procurement and accounts payable. But are those companies putting their organizations at risk, or at the very least missing out on opportunities for more efficient supply chains by not taking a more strategic view of vendor management? For organizations in many different industries, the vendors are at the heart of their business. A weak or deficient vendor base poses a significant risk to their supply chain and business continuity. In this blog post, we will discuss how to save money and time with vendor management.
Vendor Management Tools
There are tools designed to ensure that your company is identifying, recruiting, onboarding, and managing vendors from a strategic viewpoint to reduce disruptions in your supply chains and increase business continuity.
The first tool to consider is a vendor onboarding portal. This cloud-based tool helps you to identify, recruit, onboard, and manage vendors in a secure, efficient, vendor self-service environment. A robust vendor onboarding tool will give you the ability to collect and validate critical data and verify and enforce compliance for potential and existing vendors. It will also collect business and industry-specific information to assist you in making informed decisions about your vendors.
Automating your vendor onboarding process is key to saving time; however, it doesn’t mean that you are shirking your duties to vet your vendors. Many automated processes can determine the risk level of vendors as well as find out if they are on any government watch lists.
Once vendors are onboarded, these same tools help track and validate licenses, insurance, diversity certifications, and more. These tools should provide the ability to automatically track expirations and notify all identified stakeholders from both the vendor and the buying company. They should also come with built-in document management capabilities as well as a workflow to route data and documents to other constituents, such as legal, risk management, AP, finance, merchandising, logistics, and others who may have a stake in the onboarding process.
Vendor Management Techniques
Once you have a robust vendor onboarding tool that ensures compliance, you can address vendor management from the transaction perspective. Cloud-based vendor portals allow vendors 24/7 access to check on the status of payments, submit and track payment disputes. Additionally, they can submit requests for payment via web-based invoice submission. A vendor portal also provides the platform to build a supply chain finance initiative, like dynamic discounting.
AP automation is an important vendor management technique crucial to a strategic vendor management program. Through the use of workflow, data capture, document management, and other processing functions, a hosted, cloud-based accounts payable automation solution is a key component of a comprehensive vendor management solution.
Spend analysis is a very useful management tool to manage onboarded vendors’ administrative and transactional activity. These tools allow you to look at where spend is going and to identify trends and target rogue spending.
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While there are many tools and solutions on the market, beware of the “one-size-fits-all” solution, of which there are many. These multi-tenant SaaS solutions often do not have functionality that is critical to your specific business or industry. A single-tenant, toolkit-based solution may offer you the most flexibility. Additionally, in a single-tenant, cloud-hosted model, you own all of the data and have 24/7 access to it.
If you want to turn your vendor management from a back-office function into a strategic part of your business, contact ICG. Or, request a demo to learn how you can save money and time with vendor management.