What are some of today’s top vendor management best practices? What vendor management pitfalls should you be watchful of? Which of these practices can improve your bottom line? We have scoured high and low searching for vendor management practices that will put you miles ahead of your competitors. Here are our top eight recommended vendor management practices.
1. Adopt Vendor Management Software
Vendor management software makes it possible to capture supplier data, organize it, and onboard new vendors in one central place. Systems such as those provided by ProcurePort enable pertinent data such as vendor names, business addresses, and EIN tax numbers to be easily tracked.
2. Track Supplier Performance
Management guru Peter Drucker often emphasized that “You can’t manage what you don’t measure.” And it’s true. If you’re not tracking how your vendors are doing, whether they are delivering on time, at the quality promised, and at a favorable price point, how will you know if you should find better vendors or not? Data is needed in today’s world to make data-driven decisions.
3. Verify Vendor Qualifications
When it comes to vendor management best practices, one key method to ensure that you are working with serious folks is to check their vendor certificates and licenses. Can they source and provide what you need in the quantities you require? A great way to get this information is to issue out Requests for Proposals or Requests for Information. ProcurePort’s RFX templates and vendor management software help streamline the entire process.
4. Evaluate Vendor Risk Regularly
What is the associated vendor risk with each of the suppliers you are working with? Make time to occasionally review and assess the risk for vendor quality, performance, service as well as security. Why is this important? Unreliable vendors can cause costly disruption of service to your business, which may result in negative impacts on your business’ performance. Vendor risk management can assist in improving vendor supplier relationships.
5. Keep an Eye on Insurance Details
Vendor insurance is one of those aspects of the vendor supplier relationships that is often overlooked. However, tracking insurance coverage dates and policy numbers is paramount. Why? Because insurance not only allows you to reduce potential losses but promotes trade while providing financial stability to both parties. Insurance plays a pivotal role in the sustainable growth of vendor/buyer relationships.
6. Automate Contract Renewal
Procurement and sourcing teams must often manage multiple contracts at a time. Working with various vendors means you must be on top of things every single day. You need to know when contracts are expiring and when they need to be renewed. It can be time-consuming to handle all this manually. Fortunately, when you have efficient vendor management software and contract management software, this is all done automatically for you.
7. Periodically Write Reports
One of the vendor management best practices that is slowly being eroded is that of report writing. Audit reports reviewing vendors can be insightful and allow better decisions to be made in the future. Another reason to pursue this practice is that it can quickly show when a vendor isn’t meeting performance expectations. Such reports highlight vendors who are missing agreed-upon service levels. In short, reports will assist you in identifying and rectifying vendor management problems.
8. Maintain Open Communication Channels
How often do you reach out to your vendors to see how they are doing? It’s one thing to identify problems vendors have but without talking to them to find out what’s going on it can be easy to dismiss an underperforming supplier. Maintaining open communication channels bolsters vendor supplier relationships so don’t skimp on this important vendor management best practice.
Invest in Robust Vendor Management Software for Your Business
Sourcing and procurement teams now have access to an array of software to help them mitigate organizational spending, improve efficiency, and vendor management. ProcurePort proudly provides a suite of e-sourcing solutions that make handling vendor relationships easier from RFX templates, contract management software to reverse auction systems. Contact us to discuss customized procurement solutions for your business.