Have you ever thought about how vendor management can help you boost your business? Researching and sourcing vendors helps companies save time and money. Strategic vendor management helps you build a strong relationship with your suppliers to achieve your ultimate goal: to benefit both companies. By constantly working with your suppliers, better deals will be achieved and the negotiation process will be easier. 

The vendor management process includes researching for the best suppliers, negotiating contracts, obtaining quotes, managing the vendor relationship and vendor performance, as well as paying for their services. Great vendor management will better negotiate the rates.  

Through vendor management, companies can select the most suitable supplier for the need of each business, which varies greatly depending on the nature of the organization. Choosing the best supplier and working collaboratively can be key to taking advantage of cost-saving opportunities, as well as taking steps to speed up the onboarding process. In addition, proper supplier management can help reduce the risk of supply chain disruptions and can ensure that the services provided are delivered on time, following high standards. 

Benefits of vendor management 

Some of the benefits that a company will experience when working with a vendor management system are: 

• Better selection: Through proper vendor management, companies can count with a wider selection of vendors. More choices mean better costs.  
• Performance optimization: Tracking and measuring the performance of the supplier helps to improve efficiency. 
• Reduce costs: Vendor management helps companies to have a better relationship with suppliers which also implies a better negotiate of rates. This can increase profit margins. 
• Improvement of working procedures:  Having all vendor-related information in a single place can help provide access to all required information at once, which can also improve the decision-making process. 
• Value improvement: Vendor management can generate long-term savings and improve profits over a period of time. 

5 Tips for vendor management success 

Focus on collaboration 

Some of the best practices of vendor management have to do with collaboration. To achieve a strong relationship with your suppliers, you need to think about collaboration. This means that vendors have to be able to participate in key strategy sessions. It is really important to understand that a company is working side by side with their suppliers. In this way, comprehension and constructive feedback become essential for a strong relationship to take place. 

Regular meetings 

In order to make sure that vendors are aligned with the companies’ needs, it is recommended to have regular and frequent meetings to keep your vendors informed about your engagement process. Companies need to share relevant information with their suppliers so that they can have a better understanding of the current situation and needs.  

Throughout these meetings, companies can share with their supplier’s relevant information such as new products being launched, important decisions that the company has made, changes in the design or new staff members being incorporated to the working procedures. 

Long-term Partership 

Vendor management seeks to help in building long-term relationships with suppliers. Long-term relationships make it possible to generate more profits, because both parties are familiar with the work processes, which accelerates execution times and reduces the need to provide information from scratch to suppliers. 

Create a win-win situation 

To make the most of a commercial relationship, it is important to understand that both vendors and companies want to achieve their business goals. Therefore, a clear negotiation process, honesty and cordiality are essential. It is also important to share interests and projections to establish a solid, lasting and effective bond. Negotiation must be completed in good faith.  

Focus on quality 

Excellent vendor management not only helps companies reduce costs; it is also a great way to create a better-quality bottom line. In other words, vendor management generates added value. Quality details can also be specified from scratch in the contract. 

To improve any business strategy, vendor management becomes a must to analyze and optimize. A strategic approach can help to manage suppliers in a much more efficient and productive way. When we think about the best practices of a company, vendor management is a really important aspect to consider. 

References 

https://taulia.com/glossary/what-is-vendor-management/

https://www.hcmworks.com/blog/7-reasons-why-your-business-should-focus-on-vendor-management

https://www.workmarket.com/blog/8-tips-to-maximize-your-vendor-management-strategy