What is Vendor Management?: Your Complete Guide

We live and function in a connected world and there are few if any businesses who don’t rely day to day on external vendors.
They might be a delivery company, getting your goods to your customers, or delivering vital raw goods to your business for further processing.
Your IT services may well be outsourced, sometimes to multiple companies; who do you contact if something goes wrong or you need to make changes?
Even the maintenance of your premises is most likely outsourced – when the roof leaks or the power goes out who do you contact?

This scenario isn’t new, companies have always relied on others to provide services that they either don’t want to or can’t provide themselves.

However keeping track of who does what has become increasingly challenging, especially when some of those services are virtual by their very nature.

Enter Vendor Management Services – VMS

The same technology that can cause headaches is increasingly coming to the fore to help SMEs manage their vendors.

Vendor Management Services (VMS) are increasingly making their presence felt at all levels of the enterprise, including the SME sector.

The concept behind VMS is simple – pull all your vendor information together into one place so that your management headache is lessened, but VMS is much more than that.

It offers a number of distinct benefits to most businesses that represent a genuine advantage rather than just a new way of doing things the way that they have always been done.

VMS are predominantly cloud-based, allowing you to access them from wherever you are.

If your business operates 24/7 and you lose your broadband in the middle of the night, being able to quickly know who to contact can make a difference!

Increased efficiency

By pulling all your vendor information into one place, usually a centralised information database, you have a single data source for all your suppliers.

Need to contact your logistics company?  The details you need are right there.

Need to double check the terms of service of your IT provider?  They’ll be easily accessible.

Want to gain an oversight of the cost of your vendors, either overall or in a specific area of business?  The information is there along with tools to analyse it.

Vendor management effectively condenses the responsibilities and function of a whole department into one, easily accessible tool.

If vendor management has been distributed throughout your company, VMS allows management to more easily gain an overview of all that is happening without having to chase multiple sources.

Ensure compliance

Having pulled all your vendor information into one place, it becomes far easier to ensure that all or your vendors are fully complying with:

    • The terms of their contracts
    • Any additional requirements;
    •  Insurance
    • The upcoming General Data Protection Regulations (GDPR) introduce new obligations on data processors who use third-party vendors.

Beyond this function, VMS allows for more granular processing and analysis of financial information.

Think: are there regular charges being incurred which go above and beyond the basic costs of the contract?  Are there noticeable delays in delivery or completion?

Being able to identify patterns and trends with specific vendors or across the broad sweep of vendors gives you the information you need to act before a potential problem becomes a pressing issue.

This improves your business and your relationship with your vendors.

Quiet informed chats are better than constant crisis management every time.

Reduce Costs

Not only can VMS improve your bottom line by identifying where the cost of vendor services is perhaps not what was promised, the actual cost of that analysis decreases as well.

VM systems are not just a repository of information, they include tools that allow you to contrast and compare, to analyse actual delivery against promised results.

Not having to wait for staff within your organisation to furnish these figures, and potentially have to recheck them in event of a dispute saves you:

    • Time
    • Your staff time
    • Allows you as a business owner to concentrate on what you should be doing; running your business.

Optimise performance

The ability to analyse vendor performance and compliance across the board will make your relationships with your vendors more efficient.

Their efficiency impacts directly upon your bottom line, VMS makes it possible to apply to third parties the sort of efficiency analysis you would expect to apply internally.

Disaster recovery

The fact that your vendor management system is cloud-based also makes it a valuable facet of your disaster and recovery planning.

Even in the event of a catastrophic event, you will be able to maintain contact with all of your vendors enabling you to more easily plan your recovery and return to operation.

Compare and Contrast

If you are contemplating adding a new service or a new vendor VMS will allow you to model their promised performance against the current status of your business and it’s relationships.

By inputting their key data; costs, deliverables, timescale, compliance and capacity, your VMS will allow you to perform accurate analysis as to how this vendor change will impact upon your operations.

If you then decide to move ahead with the new relationship your VMS will allow you to ensure that the promised improvements or savings are being realised.

Some final thoughts

Vendor management isn’t new, all companies have been doing it for years but improvements in technology have affected this as they have so much else.

Jera IT has been specialising in Vendor Management Systems as we recognise the tremendous advantages they offer to modern businesses in terms of streamlining what can be a thorny area of business life.

If you are not already using a VM system, or if you are but aren’t sure that you are getting maximum benefit from it, contact us.

We will be more than happy to sit down and discuss how we can help you and your business achieve greater efficiencies and control through this technology.