LAST GUIDE TO VENDOR MANAGEMENT SYSTEM YOU’LL EVER NEED
A Complete Guide to the Vendor Management System. Part 2
This article is for you if you want to understand the concept first and then be willing to invest and master your vendor and vendor initiatives.
Vendor Management Software Examples
Many companies today use vendor management systems to make these processes more efficient and accurate. But which solution is best for your business? After all, there are plenty to choose from.
This is where we work. Examples of VMS companies include the following.
This VMS platform includes many IT features, such as managing telecommunications costs and automating requests to support.
It also provides most of the capabilities one would expect from supplier management, such as contract management, cost tracking, and asset visibility. One of the big advantages is that Genuity integrates many platforms, including Quickbooks, AWS, Salesforce, and G Suite. Genuity’s low, transparent price is mainly due to the limited set of features compared to other solutions on this list.
Ivalua is the ideal VMS system for medium and large businesses that want to manage budgets, contracts, and accounts. With its strategic sourcing, pay-as-you-go, and direct cost management, Ivalua includes many of the classic features you’d expect from vendor management software.
The main advantage of Ivalua is its adaptability, with many ways to customize the functions according to the business’s specific needs. It is also elementary to use and pleasing to the eye.
Gatekeeper is the ideal solution for large companies. Gatekeeper is a vendor management system where each plan has unlimited storage and a total number of users — a huge benefit if you’re thinking about how much you want to spend on a solution.
The critical advantage of Gatekeeper is that it is a cloud system that is very easy to train for teams, both large and small. This means that its vendor management functions are easy to learn and get the most out of.
Another supplier management system with customizable features, the Precoro online portal, allows you to manage contracts, store all relevant vendor information, and track performance. With this software solution, it is easy to drive purchases.
Users benefit from Precoro through its simple, easy-to-use interface and helpful customer service. This means that suppliers can easily familiarize themselves with the VMS technology through smooth adaptation. It also integrates with various platforms, including Quickbooks Online and Xero.
- Oracle SCM Cloud
Best suited for small and medium businesses, Oracle SCM Cloud is one of the oldest vendor management systems on this list, and there are many good reasons why it has been running for so long.
With a wide range of applications for procurement processing, order management, product lifecycle management, inventory, and more, this software solution can do almost nothing in terms of supplier management.
Vendor Management Process
While it is not possible to have one specific supplier management process that covers all businesses and suppliers, we can combine the basic steps that underlie an organization’s interaction with its suppliers from start to finish.
1. Defining and setting business goals
Before starting a vendor management process, it is essential to define and set business goals that require vendor involvement. It helps to get each business unit’s requirements and prevents duplication of effort and waste of resources when selecting and contracting with suppliers. It also helps in the later stages of measuring and evaluating the effectiveness of the supplier, as these goals set appropriate indicators.
2. Creating a team
Once the business goals are recognized, the next step should be to create a dedicated supplier management team. This centralized team should have the skills to set business goals and KPIs for supplier management, select appropriate suppliers, negotiate the contracting process, periodically evaluate suppliers’ performance and track all transactions.
This team is crucial because it will act as an intermediary between business units and suppliers and ensure cooperation.
It will also prevent the involvement of too many stakeholders — when vendor management is decentralized to the business unit. It leads to too many contracts with the same supplier or separate transactions with several suppliers. It prevents tracking and evaluating the effectiveness of suppliers and exposes the organization to supplier risk.
3. Building a database for all the information about suppliers
Once the business goals are clear and the vendor management team is up and running, the next step is to create an updated and classified database of all relevant vendors and vendor-related information.
Here is a list of benefits that database implementation gives:
- It will meet the needs of business units with the correct supplier. For example, the administrator may determine the appropriate stationery suppliers and computer equipment;
- After categorizing suppliers based on their type, comparisons between suppliers will be easier to assess;
- It simplifies information — disparate details on suppliers will be stored in one place and will give an idea of the current state of work of suppliers, such as suppliers with a contract, suppliers in need of renewal, etc.;
- This will ensure efficient budgeting — you can quickly identify long-term, critical suppliers and short-term, tactical suppliers and estimate budget allocations accordingly.
4. Defining selection criteria for suppliers
Once all vendor-related information has been sorted, updated, and classified, you must select the criteria by which all relevant vendors will be selected.
Although the cost has been the primary criterion for selecting suppliers, companies are increasingly looking for other criteria to determine which supplier meets their requirements best. After all, the lowest cost does not guarantee the highest value. Article CIO1 recognizes factors that are not costs to consider when choosing suppliers — financial stability, previous business experience, recognition of industrial companies, supplier compliance procedures, economies of scale, and legal/regulatory regulation. It is essential to consider all of the above criteria in order to have a holistic assessment of suppliers.
Companies also participate in bidding procedures that include inquiries and offers before choosing a supplier for high-value purchases.
5. Evaluation and selection of suppliers
At this stage, suppliers need to be evaluated based on selection criteria and, if possible, the bidding process. The proposals submitted must be carefully evaluated to understand the pricing structure, scope of work, and how the requirements, terms and conditions, terms of validity and renewal, etc. will be met. This ensures that your organization gets the most out of the vendor. Pay attention to the hidden opportunities for savings!
Assess the internal strengths and weaknesses and explore how external opportunities and threats can affect your transaction and the supplier management process. Once you’ve completed the entire evaluation process from start to finish, it’s time to choose your supplier.
6. Development of contracts and completion of work with suppliers
Well, now you have a chosen one. It is time to complete the contracting process and engage your suppliers. Typically, the contracting phase is assigned to the legal and financial team and senior management related to suppliers. The remaining business units receive a contract and interact with suppliers upon completion of the process. This is usually suboptimal in the long run — business units are finally working with suppliers daily and have valuable information on how to maximize the efficiency of suppliers. Therefore, all relevant stakeholders should be involved in the decision-making process.
A supplier management system can help different industry leaders connect better with suppliers and business partners through a single platform. It enables collaboration, sharing of information, and open communication. This creates a trusted ecosystem where your external workforce is encouraged to achieve better results.
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