Is it a strategic part of your organization?
Does your company view vendor management as just another back-office function to be administered by procurement and accounts payable (AP)? Is your company putting your organizations at risk, or at very least missing out on opportunities for more efficient supply chains, by not taking a strategic view of vendor and supplier 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. Does your organization fit this description?
There are tools available to your company that are designed to help your company in identifying, recruiting, onboarding and managing vendors from a strategic viewpoint to insure there are no no disruptions in your supply chains that could threaten your business continuity or have a negative impact on financial performance. Let’s take a brief look at some of tools available to you.
The first tool to consider is a vendor onboarding, or as some refer to it, supplier onboarding, portal. This cloud-hosted vendor portal tool helps you to identify, recruit, onboard and manage vendors in a secure, efficient, vendor self-service environment. A comprehensive vendor onboarding or supplier onboarding 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 vendors you might onboard to be part of your vendor community. Once vendors are onboarding these same tools help you to track and validate licenses, insurance, diversity certifications and any other information that requires validation and compliance. These tools should provide the ability to automatically track expirations and notify all identified stakeholders from the vendor and buying companies. These powerful business 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 and ongoing vendor management process.
Once you have a robust supplier onboarding tool in place and you are able insure compliance from your vendors and able to validate their critical data, you can now approach vendor management from the transaction perspective. Cloud-hosted vendor portals, or supplier portals, should have the ability to allow vendors access 24×7 to check on the status of payments, submit and track payment disputes, as well as submit requests for payment via web based invoice submission. A vendor portal also provides a 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 while also providing a significant return on your companies cash flow.
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 robust accounts payable automation solution is a key component to any comprehensive vendor management solution. If your vendors are not getting paid in a timely manner you add risk to your supply chains as well as negatively impacting financial performance via lost discounts and inefficient cash management.
Now that you have onboarded and are actively managing your vendors administrative and transactional activity, a very useful management tool to deploy would be spend analysis. These tools allow you to look at how money is being spent and where spend is going. This analysis will allow you to identify trends and target rouge spending.
While there are many tools and solutions on the market that address the issues discussed above, 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 the functionality that is critical to your specific business process. A single tenant, highly configurable 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 all of your data 24×7 so you have the critical information you need when you need it to make informed business decisions!
If you are interested in evaluating your vendor management to change your companies perspective from a back-office function into a strategic part of your business contact ICG Consulting and see how ICG can help. You can also request a free evaluation from ICG Consulting to see if there are areas to improve your enterprise vendor management.