What Is Vendor Management?

Vendor management enables businesses to oversee and optimize vendor contracts by measuring the performance of contracted products and services. This facilitates contract negotiations to take place and provides businesses with clear development opportunities.

Vendor management is an essential process that empowers organizations to upend business practices, reduce costs, enhance business continuity planning, and lessen vendor-related risk. Introducing effective vendor management processes ensures the smooth delivery of products, excellent service deliverability, and long-term value. 

In the digital age, businesses need to establish positive vendor management relationships to plan for the future and develop customer-centric associations. Digital transformation strategies are being implemented worldwide by businesses that recognize the importance of digital-first. Vendor management processes are an essential part of digital transformation and can help businesses to establish long-term benefits that eventually trickle down to consumers.

What Is The Vendor Management Process?

According to Gartner, the vendor management process is a discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the deal life cycle. 

The vendor management process includes several different activities that enable vendor management to take place. 

These include: 

• Vendor Selection 
• Contract Negotiation 
• Vendor Onboarding 
• Monitoring Vendor Performance 
• Monitoring Vendor Management & Risk

Successful vendor management procedures incorporate the activities above to ensure fair and effective results and service delivery from vendors.

What Are The Benefits Of Vendor Management?

Vendor management is crucial to modern businesses that tend to have a lot of moving parts. 

Outsourcing services to experienced third-party vendors provide a host of benefits and allows businesses to: 

• Improve Service Quality 
• Increase Operational & Financial Efficiency 
• Reduce Costs 
• Broaden Service Availability 
• Accelerate Service Delivery 
• Focus On Core Business Functions 

What Is A Vendor Management Inventory?

A vendor-managed inventory (VMI) is an inventory management method in which manufacturers and suppliers of goods optimize inventories held by distributors.

The vendor-managed inventory business model gives vendors complete autonomy over inventory maintenance. It helps to solidify a symbiotic relationship that businesses and vendors both use to create a unified risk-sharing approach.

What Is A Vendor Risk Management Plan?

A vendor management risk plan is an organization-wide agenda that summarizes the types of conduct, access, roles, and responsibilities that a business undertakes with its vendors. The entire organization must contribute to the vendor risk management process whilst providing enhanced visibility to compliance, HR, management, and legal departments. 

Vendor risk management plans also help to reduce the frequency and severity of cyber-attacks that involve third or fourth parties and protect sensitive data.

What Is Vendor Relationship Management?

Vendor relationship management (VRM) is a business activity that uses software tools to provide customers with independent vendor management systems that allow for better engagement. 

Good vendor relationship management helps businesses to save time and take advantage of lucrative deals, stimuli, and rebates offered by happy and loyal vendors. When good relationships are established long-term, businesses can exploit agile pricing strategies and gain a competitive edge over the competition

What Are Vendor Management Best Practices?

Vendor management best practices help businesses extract maximum value from vendor relationships. Businesses use vendor management best practices to monitor vendor performance, deliver high-quality products or services, and lower risk. 

Vendor management is an intricate business discipline that requires cross-departmental functionality, financial and human resources, and executive buy-in.

Vendor Management Tools

There are a variety of vendor management tools available on the market. Choosing the right tool can be challenging for businesses and requires complex planning and assessment. 

A few vendor management software tools are as follows: 

1. Kissflow Procurement Cloud
Kissflow procurement cloud offers flexible procure-to-pay software that facilitates businesses to streamline their procurement processes. Kissflow features a dedicated vendor management module that works autonomously to fulfill purchase orders, purchase requisition, purchase invoicing, analytics, and integrations.

2. Procurify
Procurify is an all-in-one vendor module that stores vital data including contact information, address, and payment terms all in one easily accessible place. Businesses that order numerous products from one vendor benefit from centralized storage facilities that reduce shipping costs and paperwork. Scorecards and team reviews are used to evaluate vendor performance and provide actionable steps for improvement.

Vendor Management Solutions

There is a broad range of terminologies and methodologies used to categorize procurement tools. 

Here are three types of vendor management tools that every business should adopt: 

1. Vendor Engagement Tools
Vendor engagement tools are specifically designed to manage and regulate vendor relationships through active procurement cycles. Effective vendor management tools enable businesses to proactively improve relationships.Key benefits include:Better Quality
Improved Total Cost Of Ownership (TCO)
Heightened Transparency
Enhanced Total Experience

2. Vendor Performance Management
Businesses that maintain updated vendor performance data throughout the contract period are easily able to spot weaknesses at individual and supply chain levels. These businesses can skillfully implement strategies and frameworks that analyze the best course of action if vendor performance isn’t up to scratch.

3. End-To-End Vendor Management
Vendor management incorporates two key areas:

• Vendor Engagement 
• Vendor Performance Management 

Businesses need a vendor management solution that comprehensively embodies both aspects of the supplier lifecycle to achieve a complete spectrum of functionality. Using an end-to-end management system enables businesses to extract maximum value from vendors.

What Is SAP Vendor Invoice Management?

SAP invoice management is a prepackaged composite application that works in harmony with SAP ERP systems to streamline accounts payable (AP) operations by simplifying the process of receiving, managing, and monitoring routine services for AP personnel.  

SAP invoice management systems enable businesses to process invoices more efficiently by using integrated problem resolution software that screens for problematic invoices and provides actionable solutions.