Data and personal information are two of the most valuable commodities in the marketplace today. Demonstrated by the massive international scandals related to global politics over the past 5 years, it’s evident that an individual’s data and information is almost as good as gold. Procurement departments deal with some of the most sensitive information that companies exchange with one another. As such, security and vendor risk management need to be top priorities.
There is a massive stream of information that’s exchanged between companies that do business together. Especially in the area of procurement. In negotiating contracts, huge dollar amounts are being discussed, not to mention the information on companies that is collected prior to hosting the reverse-auction.
Beyond the pre-auction, and auction phase, in awarding the contract to a supplier or vendor, even more valuable and sensitive information is divulged.
What is Vendor Risk Management?
Vendor risk management (VRM) is the process through which companies ensure that service providers and IT services are delivering quality and secure lines through which they can exchange information.
In other words, it’s the technical back-end that keeps information sent to, and received from suppliers both safe and secure.
This is a crucial function for procurement departments, as the lack of a quality vendor risk management system and process can lead to devastating results. In extreme cases, a data breach could lead to the sinking of companies in an entire supply chain. In less severe cases, a single business or pair of businesses could be susceptible to fraud, severe financial loss, and eventually total bankruptcy.
The larger a company is, and the more suppliers/vendors that they work with, the more important it becomes to have a robust and comprehensive vendor risk management system in place.
Analyzing Your VRM System
No single vendor risk management system is going to be the right solution for every procurement department. However, there are a few trends in VRM systems that should be closely reviewed when analyzing your vendor risk management processes and procedures.
After conducting a review of the vendor risk management system as it stands, hard-data and valuable insights can be utilized to make informed decisions. Three staple pillars in vendor risk management are:
Contract and Vendor Standards
Maintaining a baseline of security standards means not only ensuring your own company has a comprehensive standard for privacy. In order to keep data secure, it’s also vital to work with vendors and suppliers who demonstrate the same commitment to data security.
Otherwise, if there’s an opening on one side of the communication channel, cyber threats and hackers can utilize that opening to conduct a terrible array of mayhem.
Building redundancy checks into a series of processes and procedures is always a wise idea. The more data there is incoming and outgoing, the more necessary an internal audit becomes.
With more data flowing, the chance for breach, or lapse in security grows with it. Therefore, a periodic internal audit conducted at random within any specified timeframe is an elegant solution that has quickly become an industry best-practice.
This keeps data where it should be, and minimizes the risk for potential breach.
Reporting and Software
Procurement departments are becoming more and more digitally integrated. This includes the integration of technology and softwares that relate to a variety of functions throughout the procurement lifecycle.
Utilizing these softwares to the best of their ability means making use of their sophisticated reporting tools. These tools deliver valuable insight into operations, cost-saving opportunities, wasted dollars, and much much more. Join the industry leaders, and integrate reporting software today.
A Final Word on VRM
Vendor risk management is one of the most crucial elements that a procurement department undertakes. The implications of a poorly conducted VRM system are far and wide, and can topple an entire supply chain.
However, with sophisticated procurement software, and the right vendor risk management systems in place, both you and your vendors can rest assured that the data flowing is kept secure and private.
ProcurePort is the premier source for everything procurement. From the latest on technology and software, to the most relevant and updated procurement information. Visit ProcurePort today and start optimizing your procurement department.