What is vendor management?
It is a process that involves building better relationships with the vendors and actively creating, monitoring, and cultivating the documentation that underpins them to ensure that the business objectives of both parties are achieved. With the right vendor management skills, companies can control costs, drive service excellence, and mitigate risks to gain increased value from their vendors throughout the deal lifecycle.
SpendEdge’s vendor management solutions help clients in selecting the right vendors, categorizing them, determining the ideal number of vendors, mitigating vendor risks, and establishing a management organization that best fits the enterprise.
Vendor management best practices
Effectively managing the vendors involves the successful relationship between the client and the vendor so that both the parties concerned can benefit from it. Here are some of the vendor management best practices that to support a strong vendor relationship :
Promote regular communication
One of the most important vendor management best practices is to share information and priorities with your vendors. Communication with vendor need not always be face-to-face as virtual communications can easily be set up and used today. Regular communications ensure that the priorities of the buyer and the vendor are understood and adhered to. The primary objective of the meetings should be to drive accountability and monitor performance.
Use data to measure ROI
A company that possesses good vendor management skills will easily achieve increased sales, reduced costs, and improved efficiency. At the end of each campaign, project or milestone with different vendors, it is vital to quantify the impact they’ve had on the business. This helps companies to justify spend and allows to objectively decide whether or not to continue the engagement or search for a new vendor to meet their needs.
Align on value
The primary aim of a business should not always be limited to getting the lowest price. In many cases, low price could also mean low quality. Not compromising on the quality is one of the vendor management best practices that businesses must abide by as this could have a profound impact on the business. The key is for both the vendor and the client to align on what constitutes a good value. It is also essential to specify the quality details in the contract.
How to create an effective vendor management process?
Rightly managing the vendors is crucial to the economic well-being of a business. In order to streamline activities in the company, an effective structure must be established to manage the vendors. Some of the key steps involved in creating an effective vendor management process include:
- Create a dedicated team for managing the vendors
- Create a database of existing suppliers and vendors, and classify them based on the nature of their services
- Implement vendor management strategies
- Establish confidentiality of transactions