As you have read in our previous blog posts, the vendors we use and our relationships with them are critical to our success as a company. Vendors can drive new growth and help us achieve profit goals and revenue gains. They are central to many activities and processes in our organizations.
Why Is Vendor Management Important?
When we’re caught up in the daily grind of running a business, it’s not easy to keep track of time spent and time wasted. Some very reliable estimates tell us that Business Executives spend an average of 15 minutes a day on hold.
I know what you’re thinking: “Fifteen minutes? Big deal!”
Sure, that doesn’t seem like a lot of lost time for one day. Now let’s see what the real damage is. That time adds up to:
75 Minutes per week
300 Minutes per month
3,600 Minutes per year
That’s about seven and a half days you’re losing each year. A week and a half you could be used to get projects done, launch new products, or grow your business. Now you can see the importance of efficient vendor management.
Effective Management Of Vendors
In our previous blog posts, we’ve talked about the importance of managing vendor-business relationships effectively. It’s no longer the case that procurement is only buying services or goods. In today’s business environment, vendor partnerships need to be a key part of your business growth strategy. You need to work with your vendors and manage your relationships strategically to reap the rewards.
Who Does Your Vendor Management?
As we’ve mentioned in the last blog, vendor management isn’t widely implemented by SMBs, nor is it well understood. So, to make sure we’re all on the same page, what do we mean by vendor management?
Vendors are the businesses and individuals that provide services and goods to your company. You might work with many different vendors and pay varying rates, have varying contacts, and varying contract terms. This can be a minefield in terms of management and so you might find that you end up overpaying for services and goods. You also might lose money on lots of hidden costs.
Vendor management can help with this. Simply speaking, this is a process involving: the research of vendors, the seeking of quotes, the negotiation of contracts, the management of vendor relationships, the evaluation of vendor performance, and the paying of vendors. Overall, you can save yourself both money and time if you streamline these processes.
Why Is Vendor Management Important?
Managing your vendors can reduce risks. We’re talking about unforeseen costs and regulatory compliance. For example, with vendor management, you can track supplies and have the necessary data available to identify risks to mitigate them.
Another reason why vendor management is essential is so you can measure and track their performance. That way, you can make sure that the vendor meets your business needs and requirements.
Essentially, vendor management will help you reduce your costs. With increased visibility, you will see hidden costs and will be able to control them to save money. You might be able to negotiate a better deal or access incentives and discounts. With this in mind, you might be interested in reading our previous blog on being nickel-and-dimed with additional costs.
As you know, loyal relationships are also good reasons to focus on vendor management. A good vendor isn’t easy to find. If you find one, you’ll need to do all that you can to build your relationship with them to build trust and loyalty.
Protecting Your Brand
Ultimately, you need to look after your business. Vendor management can help you do that. Your brand is your reputation and it holds lots of value. An unethical or unprofessional vendor might tarnish this reputation. With vendor management, you will reduce the risk of serious incidents that stem from poor vendor actions.
We Can Help!
We know this is a lot to absorb. So, if you still have questions about managing your vendors, contact us. The more things we can take off your plate, the more time you have to focus on more important stuff! And that will give you peace of mind, better Vendor relationships, and about a week and a half of your time back.