Tag: vendor management

vendor management challenges

Vendor Management Challenges: Frequently Asked Questions (FAQs)

What is the Process of Vendor Management?

Vendors are the key stakeholders in any successful business, and you need to take a strategic approach to mitigate vendor management challenges. You might be working with hundreds of different vendors, all with different contracts terms, rates, and objectives that must be efficiently managed. And that’s when a vendor management system comes into play.

With an effective vendor management system in place, you can easily set service, cost, and quality goals and manage vendors who will help you address any vendor management challenges. Here’s a quick guide that can be followed:

Step 1: Vendor Selection

Select vendors who will help you save both time and cost. Every vendor has their own set of strengths and weaknesses and you need to classify them based on the needs of your organization. This requires creating a database of existing suppliers and classifying them on the basis of the nature of services they provide.

Step 2: Service Delivery

Your vendor management leaders need to monitor the performance of suppliers and ensure that the terms laid in the contract are being followed. They need to build an effective communication channel to analyze and approve changes, provide feedback, and develop relationships with vendors.

Step 3: Service Adjustment

Optimize already established relations with your vendors. This will help you to identify areas of change and improve them based on previously defined KPIs. Implement vendor management strategies and conduct audits and assessments on a regular basis to proactively address vendor management challenges.

Step 4: Contract Review

Conduct a review meeting with your vendors as per the strategy defined. This should be held periodically i.e. once a month, quarterly, half yearly, or yearly depending on the strategy and client expectation. The agenda of meetings should necessarily include:

  • Analysis of performance based on different metrics.
  • Action points from review meetings.
  • Areas of improvement.
  • Support need to deliver the project.

Building a robust vendor management process can help procurement leaders to successfully mitigate vendor management challenges.  Request a free demo and know how our experts can assist you in addressing key vendor management challenges.

Top Vendor Management Challenges

The vendor management challenges faced by your company can depend on the size of the company and industry you are operating in.  For instance, vendor risk assessment can be a priority for larger enterprises, but it may not be the same for start-ups or mid-sized businesses. Therefore, we have compiled a list of vendor management challenges based on the size of companies.

Vendor Management Challenges Faced by Large Enterprises (Annual Revenue: Above $ 1 billion)

Challenge 1: Complex Vendor Ecosystem

Associating with large number of vendors brings innovative solutions to the business but at the same time exposes your organization to different types of security and compliance risks. It is crucial for your vendor management leaders to collaborate with vendors to ensure compliance despite having a complex vendor ecosystem.

Challenge 2: Risk Assessment Process

Understanding the risk posed by each vendor relationship is very important for your organization. It helps you determine if the vendor is critical or non-critical to the organization. It might seem easy, but for organizations having hundreds of vendors, completing a risk assessment becomes a herculean task.

Vendor Management Challenges Faced by Small and Medium Enterprises (Annual Revenue:  $ 10 million- $1 billion)
Challenge 1: Contract Management

Usually, contract management involves many people from different departments. There is no single contract management “department” in most organizations, this makes it challenging for vendor management leaders to manage contracts and review them on a regular basis.

Challenge 2: Getting Documentation from Vendors

Getting the documentation from vendors is one of the key vendor management challenges faced by organizations of today. It leads to unnecessary delays in legal reviews and makes your organization vulnerable to unprecedented risks.

Want to classify vendor management challenges based on the industry you are operating in and the size of your company?

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Vendor Management Challenges Faced by Start-ups (Annual Revenue: Below $10 million)

Challenge 1: Increase Efficiency

Outdated cultures and organizational structures are among the top major vendor management challenges faced by start-ups, globally.  It hampers the efficiency of companies and creates the need to integrate the latest technology.

Challenge 2: Cost Optimization

Cost optimization requires the identification of sourcing opportunities that can streamline and standardize business processes while meeting organizational goals. This can be a tough task for start-ups as the processes are new.

To know more about the top vendor management challenges faced by companies, request more information.

Strategies to Mitigate Vendor Management Challenges

Solution 1: Get a Dashboard

You need to consolidate all the vendor-related data in one place and manage it. This will help you to overcome vendor management challenges that can be overlooked while dealing with multiple vendors.

Solution 2: Standardize Process and Centralize Requisitions

When hiring managers operate independently throughout your organization, it’s hard to gain a clear picture of your suppliers and address vendor management challenges. By setting up a centralized and simplified process, you can streamline the work for teams and gather all information in one place.

Solution 3: Scrutinize Billing and Payment Process

Supplier and vendor data is often disorganized and results in double billing, data entry errors, and incorrect time reporting. Automation and a systematic validation process can result in cost optimization and help you to address vendor management challenges.

Solution 4: Ensure Compliance

Most companies fail to classify employees. The risk of non-compliance arises when a hiring manager gets “creative” and starts hiring what should be full-time employees as independent contractors. You should avoid this misclassification of independent contractors and ensure full compliance with the federal law.

Solution 5: Develop Contracts and Monitor Them

Contracts are often assigned to the teams involved with vendors. This seems to be inefficient in the current scenario. Therefore, all the relevant stakeholders should be involved in the decision-making process to maximize vendors’ operational performance and mitigate vendor management challenges.

Mitigating vendor management challenges is crucial for companies looking to sustain themselves in the corporate landscape. Get in touch with our experts and know how they can guide you in devising strategies that can help you overcome vendor management challenges.

vendor management process

4 Key Steps to Improve Your Vendor Management Process

Earlier, procurement was simply a department that was responsible for the purchase of goods and services. But now, procurement is considered to be an integral part of the overall business strategy. To maximize the value for your money, you need to establish a winning vendor management process with strategic planning.

Moreover, you would also require an effective and productive vendor management process that can maximize value, build strong relationships, and support your company’s short- and long-term goals. Depending on the size of your business, you can implement vendor management best practices and manage suppliers accordingly to gain a competitive edge in the market.

At SpendEdge, we understand the impact that an effective vendor management process can have on your company’s short and long-term goals. Therefore, in this blog, we have pinpointed out ways through which you can create an effective vendor management process.

A productive vendor management process can maximize the value of your company significantly. Request a free demo and know how you can establish a vendor management system.

How to create an effective vendor management process?

Evaluate the process

Every business has different goals and requirements. To get the most from your vendor relationships, you need to understand what are the objectives that you want to achieve from your vendors to maximize the company’s success. A close look at your business and vendor management process often reveals cross-departmental processes that are fragmented, unmeasured, unmanaged, and disconnected.

By gaining a clear view of the procurement goals, you’ll be able to set benchmarks for the right kind of vendor. This will help you zero in on those suppliers who best align with the company’s priorities and ambitions apart from enhancing the vendor management process.

Optimize third-party spend

Before optimizing the spend, you need to have a clear understanding of the existing spend. Perform a detailed spend analysis and gain visibility on the resources already flowing out through direct and indirect spend.

Spend analysis can help you identify the vendors that are receiving the lion’s share of the company’s spend and help you make informed decisions to refine your vendor management process.

Interested in conducting spend analysis for your organization?

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Sort vendors smartly

The days of selecting vendors solely on the basis of cost are gone.  Now you need to silo your suppliers according to your industry and specific business goals. This includes evaluating their cultural compatibility, time orientation, and decision-making process. They  can be classified into three groups:

  • Primary vendors are single-source, with high value and low volume
  • Secondary vendors have multiple sources and provide moderate value
  • Tertiary vendors provide plentiful options, with low value and high volume

Sorting your vendors according to these categories gives you strategic benefits for simplifying performance management and improves the vendor management process.

Monitor performance

No matter how long have you been associated with your vendors, regular performance reviews are a must. The KPIs set by your vendor management system will offer the guidelines required for determining the value offered by a particular supplier or vendor. A few KPIs that can be beneficial for supplier benchmarking while evaluation are:

  • Mutually agreed targets
  • Contract compliance
  • Vendor risks in terms of finance and performance


vendor management best practices

Vendor Management Best Practices: Reasons Why it’ll Help Companies Crush the Competition in 2019

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.

A productive vendor management policy is one of the vendor management best practices that can financially materialize the contribution of suppliers. Interested to know how? Request for a free demo below!

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.

Optimize cost

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.

Want to know how following vendor management best practices can result in cost reductions for companies?

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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.

Enhance value

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.

Still wondering how implementing vendor management best practices can benefit your organization? Get in touch with our experts below and know how devising a tailor-made vendor management policy can help you leverage all such benefits.  


4 Vendor Management Best Practices Automotive Industry Companies Must Follow

The automotive industry is undergoing a period of immense disruption like never seen before. Influenced by new manufacturing and procurement processes and innovative designs, neither vehicles nor auto manufacturing facilities look like how they did a decade ago. Automobile companies of today are facing challenges in effective category management, identifying and following vendor management best practices, and leveraging data and analytics for their benefit. Rapid innovations in the automotive industry are putting tremendous pressure on companies to look for vendors who are ready to evolve and innovate at a rapid pace. Therefore, automotive companies need better metrics for contract compliance, procurement ROI, process efficiency, contract life savings, and invoice accuracy to bring about best-in-class procurement and effective resource and vendor management capabilities.

At SpendEdge, we understand the impact that an effective vendor management system can have on your business. And to help automotive companies thrive in the competitive marketplace, our team of experts has highlighted four vendor management best practices that can help automotive industry players to become market leaders.



Vendor Management Best Practices for an IT Services Provider – A SpendEdge Success Story

The global IT services market holds substantial opportunities for industry players due to increasing IT spending in the retail, healthcare, and transportation sectors. The increasing global demand for systems, services, software, and rising IT spending by governments are likely to boost the IT services market. The industry is highly associated with economic cycles as IT services are project-based and often represent discretionary spending. Apart from the conventional factors, the growing need to push companies to outsource their IT requirements is also predicted to spur the growth prospects of the IT services providers.

Moreover, the relative growth in tech-savvy consumers in the IT sector is forcing technology companies to consider unconventional and innovative ways to enhance their growth opportunities. In this technology-driven space, leading organizations are relying on innovations in their product offerings to improve customer satisfaction and increase the overall profitability.  Although the IT services space is witnessing incremental growth, owing to the presence of a considerable number of services providers, several factors may influence the growth of the IT services provider. Wth the average company spending between 4% and 6% of its revenue on IT, the need for proper supplier governance and control measures has become increasingly critical to the enterprise. Moreover, as the trend continues, many large enterprise organizations have increased dependencies on external suppliers. This is where vendor management best practices come into play. Organizations in the IT industry must leverage vendor management best practices to reduce cost and better corporate compliance.



A Beginners Guide to Vendor Management and Ways to Tackle the Key Challenges

Vendor management today is not just about comparing prices and finding the supplier with the cheapest price for a product or service, it is ultimately about building better vendor relationships that will ultimately benefit both the parties. Vendor management process allows organizations to control costs, strengthen service, and reduce risk throughout outsourcing the processes to vendors while extracting the most value from the investment.

Vendor management process

For successful vendor management process, companies must take a strategic approach to build and maintain relationships with their best vendors. Good suppliers are hard to come by, so it’s important to nurture the relationships with the suppliers that companies don’t want to lose. Vendor management process is typically broken down into four main steps:

Establish business goals

Define the business goals clearly and be as specific as possible. In order to successfully undertake vendor management, you need to know exactly what it is that you’re trying to achieve. Vendor management becomes easier where there are pre- defined performance parameters to compare.

Choose the best vendor

Companies will have to weigh the pros and cons of different vendors. Some questions to ask here include: Does the vendor have extensive experience? Are they stable? Have they worked in similar environments? Do they have standardized processes and provide economies of scale?

Manage vendors

This is the routine activity of monitoring performance and output. It’s the best way to make sure that the terms of the contract are being fulfilled. This step involves extensive communication to offer approvals, disapprovals, feedback, changes, and everything that is necessary to deepen the relationship.

Consistently meet goals

Companies aim to consistently meet their goals over the course of their relationship with the vendor. This means managing the vendor regularly to better influence and meet performance objectives on a regular basis.

Whether you’re managing 10 vendors or 1,000, SpendEdge can help you radically simplify how you track, manage, and pay your vendors. Request a demo to know more.

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3 Key Vendor Management Challenges on the Cloud and Their Solutions That You Need to Know

The IT landscape of an organization has become more like a web with several vendors involved in the IT-enabled delivery of business solutions. With the increasing customer demands, vendors are proving to be crucial for enterprises. As the outsourcing duties in cloud computing are increasing, vendors are also taking on fundamental roles in enterprise operations. Additionally, with the increasing scope, complexity and scale of the relationships of vendors, the challenges associated with them have also expanded. Consequently, the importance of effective vendor management on the cloud has increased proportionately. In this article, we have discussed vendor management challenges on the cloud in detail to help you build the framework of a potential and successful long-term relationship with your vendors.


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Ask Me Anything: Everything You Need to Know About Vendor Management

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. Contact US

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 isrequest proposal 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

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3 Key Mistakes That You Must Avoid While Setting Up Your Vendor Management Process

The vendor management system is a very important and integral part of modern businesses. An effective vendor management process can facilitate automation in critical business practices, essentially terminating the need for tasks like invoicing, billing, and vendor metrics analysis. An effective vendor management system is essential to the everyday functions of most modern-day businesses. Therefore, any mistake made while selecting an appropriate vendor system can be detrimental and its eContact USffects can be seen throughout the business. In this article, we have highlighted three steps that you should avoid while implementing your vendor management process:

Know your business goals comprehensively

To implement a better and proper vendor system, you must prepare yourself ahead of time by understanding both short-term and long-term goals of your business. It is very important to know the objective of your business before choosing a vendor system provider. Businesses that choose their system providers prematurely often catch themselves in a bit of a rut when the vendor management process does not work or fit within their established workflow. This hinders workplace production.

Know the vendor system’s traitDemo

An effective vendor management process can help a business manage their payroll, time, invoicing, vendor billing, and provide thorough analytics across both mobile and desktop platforms. In today’s business world, the vendor system must have the ability to perform each of these tasks efficiently. It is very essential that your vendor system functions properly across all platforms to allow a seamless workflow. Additionally, detailed vendor analytics allow businesses to analyze their expenditure and profits on a per transaction basis, leaving room for further evaluation of vendor and business relations.

Implement your vendor management system appropriately

When you are ready to implement your new vendor system, ensure that it fits properly within your already established workflow. Also, pay extra attention and take special care of its implementation to ensure all services and functions are working effectively and properly. Additionally, ensure that you have a clear roadmap for its implementation and strong technical support.

An effective vendor management system is very essential for businesses to drive service excellence, control costs and mitigate risks. We at SpendEdge, believe that smart vendor management system can help businesses fetch an increased value from their vendors throughout the deal lifecycle. To know more request free proposal below.

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4 Vendor Management Best Practices That You Must Know

Vendor management is gradually becoming one of the core competencies for successful enterprises. It is a critical element for businesses to build a relationship with their suppliers and service providers and will consequently strengthen their businesses. Furthermore, selecting the right vendors is often critical to any company’s success. Bad vendor management systems and disorganized relationships can result in performance interruptions and even ruined reputations. Therefore, the need to adopt vendor management best practices comes into the picture. Let’s examine some of the vendor management best practices that will help organizations create a mutually beneficial relationship and advance the organization’s goals. 

 Vendor Management Best Practices

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#1. Carefully examine the options

Some industries might have only a handful of vendors to choose from. However, in most cases, there is no shortage of market competition and it is important for companies to do their homework before making their decision. Businesses must first assess their needs and narrow down potential vendors based on the pertinent criteria. Carefully examining the options is one of the vital vendor management best practices for companies. Some companies may require multiple vendors to fulfill their needs, but consolidation reduces confusion and will likely allow for cost savings.
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#2. Balance commitment and competition

One of the key aims of having a vendor management system is to gain the commitment of the vendors to assist and support the business operations. On the other hand, the vendor tends to expect a certain level of commitment from the company. It does not enterprises must blindly accept the prices they set. One of the key vendor management best practices is to gain competitive bids.

#3. Provide insights on current and future trends

Vendors and organizations depend on each other to thrive in the market. Therefore, providing insights on current and future trends is one of the key vendor management best practices. Companies must analyze their vendors’ experience with other companies, have an in-depth knowledge of the industry, and use these as inputs while strategizing and optimizing the vendor management system. Moreover, vendors manage multiple clients and companies haven’t built rapport with their point of contact, chances are that they could miss out on new developments. As vendors evolve and add more services, capabilities, or offerings organizations have to be aware of what’s new in the market. Vendors must be informed that the company wants to be included on these types of announcements.request proposal

#4. Share information and priorities

One of the most important vendor management best practices is to share information and priorities with the vendors. Vendor management best practices provide only the necessary information that is required for the vendor to serve your needs better. It may include new product launches, limited forecast information, and changes in design and expansion or relocation changes.

Do you want to adopt vendor management best practices for your business but confused how to start?

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