Vendor management involves many activities related to the suppliers you use to run your business. Everything from selecting vendors to negotiating contracts, to reducing risk and delivering services will impact your business.
Any business that works with suppliers of products or services needs to have good vendor management practices. This job is essential to ensure seamless business operations and to maintain an amicable partnership with the suppliers.
Depending on the type of business you’re in, you might work with vendors from diverse industries and of different sizes. These include IT consultants, security personnel, financial advisers, cleaners, and a lot more. If you self-manage your vendors, you know how much time is involved.
How Vendor Management Helps Your Business
Proper vendor management is not an option, but a necessity for practically all businesses, including small and medium-sized operations. We should give vendor management the priority to fulfill your business objectives. Procedures like reducing expenses, expediting your onboarding process, and ensuring timely delivery of services and goods are just a few examples.
The following are some of the specific business benefits you can enjoy if you have an efficient vendor management system in place.
Selecting the Best Vendors
Each product or service you use will have hundreds of potential providers. Good vendor management practices can make the process easier and faster. It will give you more choices and a better comparison of quality and prices.
Keeping Track of Supplier Performance
As your business grows and you work with more vendors, it will get harder to keep track of the value of each one. An efficient VMS will give you a better view of all the information about your vendors, from the initial contracts to pending deliveries of purchased goods. With this kind of integration, you can monitor your vendors better and judge how much they contribute to your business.
Improve Relations with Suppliers
Proper vendor management takes into consideration what is best for everyone involved. It's not just about getting the best services at the lowest possible prices. It also provides security to the vendor, which protects both their business and yours. With both of you benefiting, you will enjoy a lasting business partnership.
Get Better Rates
It's hard to find the best deals if you randomly look for suppliers. But with a vendor management system in place, you can easily compare rates and quality, enabling you to get the best value for money.
Minimize Supply Chain Disruption
The moment any part of your supply chain comes to a halt, everything else is affected, all the way to the customers. There are many reasons why this could happen, and some are unavoidable, but with the help of a reliable VMS, the risks will be minimal to nonexistent.
In-House Vendor Management vs. Hiring a VMS Provider
Now that the importance of vendor management is clear, the only question that remains is how to implement it for your business. One option is to create your own vendor management process, and the other is to hire a VMS provider.
Pros and Cons
Creating and running your own VMS is possible, and there are a few companies that will help you do this. You would have to create specific strategies that would include identifying business goals, monitoring KPIs, choosing the right vendors, and consistently monitoring their performance, among others.
As you can see, it can be a tedious and skill-dependent endeavor. There are some VMS programs that you can download for free that can help. You also don't need to spend much if your in-house staff handles the process. However, unless you only work with a couple of vendors, doing your own VMS might prove too taxing in the long run. Especially if you are not up to speed in this area of business.
Looking into Hiring a Professional VMS Provider
By hiring a VMS provider, you will gain access to the most advanced vendor management tools and experience the most efficient processes. Think of the time you’ll save!
You can cut business expenses by a considerable amount, enhance communication with your suppliers, boost profits, and increase customer satisfaction, among many other benefits. Best of all, your VMS provider will take care of all this for you. Most importantly, so you don’t need to take your staff away from their primary responsibilities.
The one drawback of hiring a VMS provider is that you will have to pay a monthly fee for the services. However, it won't take long to figure out that the returns will be greater, and the expense is worthwhile.
We can help!
Our upcoming webinar is perfect if you want to learn more about vendor management. Or more importantly if you want to upgrade your current VMS. Just click here to sign up. Listen to business experts share their knowledge on the subject and get the chance to ask questions afterward. We’ll see you there and if you would like to speak to us directly, give us a call!