According to Compliance Week, Nearly 35% of companies work with more than 1,000 third parties, while almost half of those work with over 10,000 third parties. Choosing an effective vendor management solution is crucial for mitigating risks and controlling service quality. This is especially relevant in the IT industry, where outsourcing is a common business practice.
This blog will create a basic understanding of the overall scenario of a Vendor management system, and help you choose the best vendor management software system for your business by providing you with best Vendor management solution examples.
1. What is a Vendor Management Solution?
The modern business system is equipped with a lot of advanced technologies, with great softwares comes great outputs and they help you to advance management for your brand, fulfilling the maximum of your needs, and generating tremendous ROI.
A Vendor Management Solution (VMS) lets you streamline the process of managing and coordinating supplier relationships. It also lets you have control over your entire external workforce, from freelancers to agencies, all of it in one place.
In very simple words, a Vendor Management System helps businesses to manage their suppliers (Vendors). You can also think of VMS as a centralized command system for your vendor ecosystem.
Importance of Vendor Management Solution
Well, imagine managing a huge number of Vendors in your business without the help of any centralized tool, it can be scary, right?
This is where you will find a Vendor Management Solution system simplifying tasks for you. It will help you in:
- The cost reduction by minimizing the manual administration cost.
- Gives you greater visibility and control over the vendor’s performance, and project progress.
- Manages risks and potential issues with great speed.
- Easily helps you scale your vendor network and domestic and global collaborations.
The blog highlights all the reasons why you should be using robust vendor management software, along with briefly discussed importance below as we move further.
2. Why do you Need a Good Vendor Management Solution for your Business?
A good vendor management solution helps you unlock splendid benefits for your business and achieve success by optimizing your vast vendor network. It helps you to streamline operations, improve productivity, and maintain high-quality standards for your business.
1. First, let’s know the features of a VMS
Let’s have a general overview of how a vendor management solution works:
- Contract management: it creates, stores and tracks the vendor contracts, and also warns the businesses about their contract expiration, reducing legal complications.
- Vendor onboarding: the onboarding process for a vendor is automated by a VMS, ensuring that the vendors meet the standards, complete the documents, and undergo the required checks.
- Performance monitor and analytics: a vendor's performance is measured in real-time by a Vendor management solution that tracks the Key Performance indicators (KPIs), and it lets you know a vendor’s overall performance.
- Invoice and payment processing: a VMS automates invoice production and payment processing and reduces manual efforts and errors.
- Integration with existing systems: A flexible vendor management system (VMS) must let you integrate it with your existing workspace or business infrastructure, and must have customizable features to easily mold itself towards your business needs.
2. Benefits of using a Vendor Management Software Solution
Implementing a Vendor management solution can provide you with several benefits, as listed:
1. Improved Vendor Selection
A business can identify the vendors based on their capabilities recognised by the software after monitoring their activities over the software. The software evaluates the vendors that align with the business requirements and are capable of providing quality service.
2. Increased Efficiency and Productivity
An efficient Vendor management solution is involved in the automation of vendor-related activities like performance tracking, and invoice management. It also improves operational efficiency, reduces errors, and frees up resources, leading to other initiatives. It also lets you save time by digitizing the processes and reducing manual efforts, like the onboarding process, and administrative tasks.
3. Cost Savings
A Vendor Management Solution lets your business minimize the risk of paying extra for goods, or any of the services. Implementing a smart strategy for vendor management could guide you to assess and monitor vendor performance. It can identify the cost savings and can also include renegotiating contracts, crystallizing vendors, or aiming for competitive offers.
4. Greater visibility
When your vendor management processes are automated, you gain a greater hold of visibility into every decision that is being taken by the vendors. You will also be able to know about your vendor’s location and reduce fraudulent activity using a robust Vendor management solution.
5. Reports and analytics
The data over a VMS can be synchronized with time. It provides you visibility over the vendor analytics so that you can plan to increase productivity and efficiency.
6. Optimized invoicing
At the heart of modern financial workflows, a vеndor management system is a dynamic, cloud-based platform also revolutionizing how businеssеs manage their accounts payable. It can take care of the invoices and all the payment processing. It can also automate the approvals and make sure all the payments are done on time.
3. How to Set up a Vendor Management System?
The journey of setting up a vendor payment system can be both exhilarating and overwhelming. Understanding your process towards a smooth transition could relax your head. Let’s create a basic understanding of how you can set up a Vendor management system. Follow this step-by-step process to ensure the ease of transition:
- Examine your business needs and requirements
Before moving ahead with a setup, understand what your business exactly needs. Having an in-depth analysis of your business requirements would make you choose the software that suits you best and aligns seamlessly with all your business needs.
Every business has its requirements, and evaluating the requirements deeply can help you to be cost-efficient while choosing the best vendor management software system.
- Choose the solution with desired features
After you have assessed all your needs, you must move ahead with your wise decision of choosing the best vendor management system for your business. The market has a stack of Vendor management solutions. So, while choosing, you must consider looking after a friendly user interface, capabilities, and ease of access, which ensures easy setup, and is acquired with readability, security, reliability, and quick customer support.
- Ensure easy integration
A flexible vendor management solution must let you integrate it with your existing workspace or business infrastructure and must have customizable features to easily mold itself towards your business needs.
Before integrating a solution, you must:
- Identify, assess, and plan: a thorough assessment of all your current vendor management processes, identifying the weak points will help you to understand the need in a better way, and will let you know the need for automation. Having a well-defined goal will help you in the integration process.
- Check for scalability: robust vendor management software must be scalable as your business and its needs expand. Checking the scalability, and flexibility will benefit you in the long run and a better understanding of your business analysis. It must be resiliently integrative with any of the systems you use.
- Make sure of the data security: during the integration process, you must make sure of the security so that your sensitive information is safeguarded. Implement encryption, and secure access controls.
- Make wise Investments
Investing in a software vendor management solution that addresses all your business needs, is automation-based, and is customizable as per requirement is the cherry on the cake. Businesses take a higher leap with the help of the latest technologies that make their work and management easier.
4. List of Vendor Management Systems - Top 5
A right vendor management solution can lead to a better decision for your business needs. Let’s explore the top 5 picks -
You can create a personalized Vendor Management System for your organization’s needs using Nected. It goes beyond standard automation, utilizing a rule-based engine that brings precision and customization to every step of the management process.
A. Business rule management system (BRMS): that allows you to guide decision workflow in your system. Nected’s Business rule management lets you Revolutionize your personalized flows & experimentation.
- It scales endlessly regardless of the complexity.
- Business rules must be expressed in a conditional programming language to be readable by automated applications. Business rules involve the use of “IF-THEN”, “IF-ELSE”, etc.
B. Workflow manager: it makes sure that a task is performed efficiently, correctly, and constantly. Workflow management refers to creating, documenting, monitoring, and improving on a series of tasks
- The workflow manager setups onboarding, procurement, and performance evaluation of the vendors.
- It allows seamless collaboration with all the stakeholders present.
C. Experimentation engine: this can help you measure the impact of the changes that you will make—experiments that you will make into your management system.
- Test variations in layout, interface, and experience, and try to build the most user-friendly design.
- Access vendor performance by experimenting with different Key Performance Indicators (KPIs).
Here’s a practical example how your business can utilize Nected as a vendor management solution to keep a check on your vendors:
Create and define a field Name: Suppose you’ve started working with a presentation designing agency and you require 10 presentations in a month. You can create a field name like ‘delivery_qty’ and more according to your business needs.
Here, we are checking for a vendor’s performance based on the score out of 5 by defining a field as “delivery_qty” and data type as “numeric”.
Create and define Conditions: Now, to ensure quality, you want to create some rules set or conditions. Here, you can see that a condition on the ‘delivery_qty’ parameter has been made.
- Condition 1: (Numeric Expression):
Operator: Is Less Than or Equals to (<=)
Add any message you want to be displayed to inform your internal team or to make a record.
Test the rule: to check for the successful creation of your condition, run a test that would let you know about the problem; if any.
Place the code in the appropriate configuration of your platform to ensure the specified conditions are met and the workflow operates as intended.
- Publish the rule after a successful test.
Yay, Pats on the back! You just created a rule to ensure a vendor’s quality of work.
Connecteam is a custom-built vendor management system for the diskless workforce including healthcare professionals, construction workers, waiters, and more. It was not originally designed for vendor management, Connecteam also has features that can be used for task management, document management, and onboarding.
- It allows Internal communication via in-app chat.
- Lets you report through checklists and forms.
- Provides digital onboarding courses to train vendors on company workflows.
- Also provides a digital phonebook for organizing, searching, and contacting critical suppliers.
Beeline enables businesses to efficiently manage their external partners, such as consultants, workers, temporary staff, and vendors. It lets you automate many vendor assessment and selection processes. Also helps in reducing time spent on decision-making.
- Beeline helps with Service Procurement.
- Resource tracking is much easier with Beeline.
- What is private remains hidden, beeline also focuses on data security and is much more secure.
- It also helped you to gather global workforce intelligence.
D. SAP Fieldglass
Fieldglass helps you to find and contract vendors that offer specialized services. With SAP Fieldglass, companies can easily scale their supplier list to streamline their operations and achieve business results faster.
SAP Fieldglass features:
- Provides you with Enterprise resource planning (ERP)
- Spend management, finance, and supply chain tools
- Human capital management functionalities
- Extended planning and analysis
Onspring offers you an automated business solution that helps to manage vendors, minimize supplier risks, and keep organizations audit-ready. It also helps to solve complex problems. Onspring allows users to drag and drop elements to create workflows, dashboards, etc.
- Allows you to send automated emails and SMS.
- Provides access control features that regulate users who can create, read, edit, or delete items.
- Real-time reporting in tables, graphs, and maps
- Policy, risk, and vendor management
5. Simplify your business needs with the perfect Vendor management solution.
From knowing what a vendor management solution is and choosing the best for your business, you now have a deep understanding of the key features of a robust VMS which you need for your business and invest in its growth.
In rеcognizing thе importancе of management systems; wе witnеss thе building blocks of trust and rеliability. Real-time management not only strеamlinе procеssеs but also nurtures positive rеlationships with suppliеrs and sеrvicе providеrs. Thе consistеncy contributes to thе businеss's ovеrall rеputation, a valuablе assеt in today's compеtitivе landscapе.
As we move forward with the conclusion, this call to action еchoеs. Explore Nеctеd's features and benefits firsthand. It's an invitation to еxpеriеncе the transformative power of this rule-based solution, unlocking a nеw еra of еfficiеncy, accuracy, and growth.
Your journey towards strеamlinеd opеrations begins with a simple click. Embrace Nеctеd and witness the profound diffеrеncе it can make for your business.