For many companies vendor management is treated as just another back-office function to be administered by procurement and accounts payable. But are those companies putting their organizations at risk by not taking a more strategic view of vendor management? For organizations in many different industries the vendors or suppliers are at the heart of their business and a weak or deficient vendor base poses a significant risk to their supply chain and business continuity.
There are tools designed to insure that your company is identifying, recruiting, onboarding and managing vendors from a strategic viewpoint to insure no disruptions in your supply chains and your business continuity is not threatened. The first tool to consider is a vendor onboarding or some refer to it, a supplier onboarding, portal. This cloud based tool helps you to identify, recruit, onboard and manage vendors in a secure, efficient, vendor self-service environment. A robust vendor onboarding or supplier onboarding tool tool will give you the ability collect and validate critical data, verify and enforce compliance for potential and existing vendors, as well as collect business and industry specific information to assist you in making informed decisions about your vendors. Once vendors are onboarding these same tools help you to track and validate licenses, insurance, diversity certifications and any other information that requires renewals. These tools should provide the ability to automatically track expirations and notify all identified stakeholders from both the vendor and buying company. These tools should come with built in document management capabilities as well as workflow to route data and documents to other constituents such as legal, risk management, AP, finance, merchandising, logistics and others who may have a stake in the onboarding process.
Now that you have a robust supplier onboarding tool in place your vendor management program needs to address vendor management from the transaction perspective. Cloud based vendor portals, or supplier portals, should have the ability to allow vendors access 24×7 to check on the status of payments or payment disputes that have been submitted, as well as submit requests for payment via web based invoice submission. A vendor portal or supplier portal also provides the platform to build a supply chain finance initiative like dynamic discounting or other supply chain finance vehicles that can be strategic tools to keep your vendor base healthy.
An important tool in the bag crucial to a strategic vendor management program is AP Automation. Through the use of workflow, data capture, document management and other processing functions, a hosted, cloud based accounts payable automation solution is a key component of a comprehensive vendor management solution.
Now that you have onboarded and are actively managing your vendors administrative and transactional activity, a very useful management tool deploy would be spend analysis. These tools allow you to look at how where spend is going and to identify trends and target rouge spending.
While there are many tools and solutions on the market beware of the “one size fits all” solution, of which there are many. These multi-tenant SaaS solutions are designed for the masses and often do not have functionality that is critical to your specific business or industry. A single tenant, toolkit based solution may offer you the most flexibility. Additionally, in a single tenant, cloud hosted model, you not only own all of the data, you have access to your data 24×7 so you have the critical information you need when you need it!
If you are looking to turn your vendor management from a back-office function into a strategic part of your business contact ICG Consulting and see how ICG can help or request a demo of one of ICG’s vendor management solutions.