Organizations all around the world have realized the fact that to compete successfully in the international market and to sustain their competitive advantage, they need to rely on effective supply chains and networks. This need to better manage supply chain has, therefore, caused a paradigm shift in the way most organizations function. Companies are now focusing on their core competencies and are roping in external suppliers and logistics providers who can ensure timely delivery of products and services to their customers. Hence, it becomes imperative for them to understand vendor management best practices and enhance collaboration with members constituting a part in the supply chain.
Additionally, following vendor management best practices helps bridge the gap between members of the supply chain and ensures deeper integration and collaboration among them. This ensures increased customer satisfaction, reduces costs, improves quality, and services from the vendor. A vendor management system also assures that a well-managed vendor will be quick to remedy the situation.
At SpendEdge, we understand the impact that following vendor management best practices can have on your business. Therefore, in this blog, we are highlighting some key advantages that companies should aim to achieve to establish a cost-effective vendor management process.
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What is the purpose of vendor management best practices?
Improve quality and performance
Implementing vendor management best practices allows companies to manage vendor performance through target policies and governance structure. This increases the time required to market new features, services, or products by vendor governance, and the set of KPIs by focusing on service agility. Moreover, these practices help improve internal and external information flow between all stakeholders involved in the vendor management process.
Formalizing vendor management best practices reduces the main business process outages and disruptions for companies and enables them to proactively address issues before they become problems. This helps companies to strengthen vendor relationships, work on existing contracts, and negotiate new ones without increasing the overhead costs.
Protect the brand
Companies’ brands hold a significant value, and tarnishing it due to the actions of an unprofessional or unethical vendor can be a major disappointment. Following vendor management best practices can provide companies with vital information regarding suppliers and reduce the probability of any unforeseen risk.
Following vendor management best practices helps companies to elevate tier-one vendor relationships beyond basic negotiated commercial terms. Such collaborations result in synergies that deliver value to both the organization and the vendor. This improves the vendor management system and promotes the reselling of new products apart from enhancing the customer service experience for companies.