How To Automate Your Vendor Management Process

For a venture to be successful, businesses require a solid and productive relationship with their suppliers. However, efficiently maintaining the vendor management process is hard when there are thousands of vendors. It is nearly impossible to keep track of them all. But what if you could automate the entire vendor management lifecycle?  

Fortunately, vendor management systems offer a host of functions to accelerate and automate vendor management. From vendor vetting to onboarding and monitoring, upgrading the entire process. If you successfully implement these solutions, you can establish a mutually beneficial vendor relationship without overextending time or resources. Before we get into automation and its advantages, let us discuss the scope of the vendor management process.   

What is the vendor management process?    

It is a common misconception that the vendor management lifecycle is limited to vendor selection, onboarding, signing contracts, delivery, and payment. While that is the main idea behind vendor management, businesses must maintain an excellent supplier-buyer relationship, establish transparency, and track vendor compliance and performance. Managing the entire vendor management process on a single platform improves efficiency and productivity. The various stages of the vendor lifecycle include:   

• Vendor selection    

Vendor selection is a time-consuming and crucial part of vendor management. During this process, businesses locate and analyze prospective vendors. To ensure that the suppliers are reliable, experienced, and meet their needs.    

• Risk assessment    

The credibility of an organization depends on the products and service they offer. That is why businesses need to exercise due diligence while selecting suppliers. Before finalizing a vendor, buyers must consider quality, delivery time, costs, and other criteria.    

• Contract negotiation    

During the contract negotiation, the buyers and suppliers go back and forth over the terms. The contract must meet the demands and needs of both parties. An efficient and effective legal agreement is necessary to avoid disputes in the future.    

• Supplier onboarding   

Organizations collect necessary information and documents from the vendors to initiate the onboarding process. The sooner the onboarding process takes place, the sooner you can start doing business with your vendor.    

• Monitoring   

Monitoring throughout the vendor management lifecycle is essential to ensure vendor compliance and performance. Selecting a reliable vendor is not enough. Organizations must confirm the vendor is upholding the contract during the partnership.  

Why do you need to automate the vendor management process?    

An effective vendor management lifecycle benefits both the suppliers and buyers. However, there is not just one quick fix for the complexities of vendor-buyer relations. There will inevitably be difficulties when businesses manage hundreds of suppliers. Hence, companies need all the help they can get to handle every vendor efficiently. That is where the automated vendor management process comes in. They initiate value creation by establishing a healthy and beneficial business environment. Here are some of the advantages of adopting an automated system:   

• Better efficiency  

Automating vendor management processes enable organizations to achieve optimum results from each task. It is easier for the vendor management team to detect any inconsistencies or delays in the process. A streamlined management process leads to a reduced lifecycle. Consequently, an automated vendor management process means improved productivity, efficiency, and performance.    

• Reduced costs    

Leveraging automation in vendor management lifecycle reduces the operational costs in various areas. Organizations can simply find and eliminate unnecessary costs with better visibility provided by automated solutions. Also, they help to limit the labor required for vendor management.   

• Expanding vendor base   

The automated vendor management system gives the support team a respite from tedious administrative tasks and paperwork. Hence, they are free to focus on vendor selection. It enables growing businesses to expand their supplier base. Organizations can handle a large-scale vendor base effortlessly using an automated system.   

• Improve supplier relationships    

A strong partnership with suppliers is crucial for ensuring future success in the collaboration. When the end-to-end vendor management process is automated, there is no scope for human error or delays. The vendors will not have to wait for onboarding, contract negotiation, or payments. When the entire operation proceeds flawlessly, the supplier-buyer relationship is immensely improved.   

• Effective vendor selection   

Efficient vendors are an integral part of any business, but they are hard to come by. A solid and automated vendor management system handles all the low-scale and administrative tasks. Consequently, the procurement team can give more time and attention to vendor selection and onboarding. And they will be able to enforce standards and choose skilled and experienced vendors.   

How to automate the vendor management process?    

As we have already discussed, automation can speed up and simplify the entire vendor management process. Whether it is the selection, onboarding, or negotiation stage, efficient technology can go a long way to streamline the operation. It enables organizations to collaborate with vendors to open new opportunities. By following these steps, organizations can reap the benefits of an automated vendor management process.    

• Supplier selection   

Identifying and selecting vendors can be a challenging task for any team. Particularly for growing businesses, where there is constantly a need to diversify their supplier base. There is always so much to do: finding potential providers, gathering data, and setting vendor standards. But adopting an automated vendor selection process can make this all go smoothly.    

Self-service portals provided by vendor management systems enable vendors to upload their information and documents. Consequently, the organizations do not have to invest a lot of time and resources to collect the necessary data. It helps to reduce the selection time and mitigate the selection process. As a result, the procurement team can go through more vendors in less time.   

• Contract negotiation   

Paper contracts mean unnecessary delays and inefficiency. A lengthy contract negotiation process can lead to stalled deals. But by adopting an automated contract management system, organizations can manage the entire contract lifecycle from a single platform. The whole procedure, from contract creation to negotiation and signing, can go smoothly using automation.   

Contract workflows will eliminate unnecessary delays or errors in the contract lifecycle. Moreover, by automating the process, it is easy to track the contact at each stage. The length of the contract lifecycle is thereby drastically shortened. Organizations will be able to set up vendors quite quickly and effortlessly.     

• Supplier onboarding    

The onboarding process becomes increasingly difficult as the vendor base grows. Unfortunately, large-scale businesses cannot afford to have a limited suppliers list. Hence, they need to employ any methods available to streamline the onboarding process.    

Vendor onboarding entails gathering necessary data and information from vendors. Usually, businesses must collaborate with external sources for goods and services. Organizations can use vendor questionnaires and self-service portals to collect supplier information effortlessly. VMS also offers vendor scorecards to evaluate vendors. By adopting these functions, businesses can decrease their setup time. Also, an automated onboarding process makes it easier to ensure legal compliance.   

• Monitoring     

Constant monitoring is critical for improved vendor performance. A company can spot problems early on if it gets a thorough overview of vendor activities. By adopting an automated system, it is easier to track and record a large supplier base.    

VMS provides notifications and reminders for important dates in a vendor's lifecycle. Organizations can get alerts about renewals, expiry, and vendor status changes. It helps businesses to stay on top of vendor lifecycles and maintain a beneficial relationship. Vendor data gathering and measuring key performance indicators through automation helps to gauge a vendor’s overall success. As a result, companies can retain competent vendors and replace inefficient ones.    

• Automated Information System    

Companies require all the information they can get about vendors to make intelligent business decisions. Whether it is regarding a provider's legal standing, experience, or rates, there is a lot an organization needs to enquire before selecting a vendor. Maintaining and evaluating all this data for numerous vendors can be a hefty process.    

Organizations can easily maintain data about each vendor thanks to automated information systems. They can access this information at any time from a single platform. Before starting the onboarding process, the procurement team can evaluate the risk involved with each vendor. Thus, empowered businesses can make strategic choices during vendor management.    

Conclusion    

There will always be fresh technological advancements to mitigate the existing business systems. Adopting and implementing these tactics is the best way for any organization to keep up with the demands of the modern world. For any business process, introducing automation encourages efficiency and accuracy. It is the same for the vendor management process.    

Businesses can better focus on high-value jobs by automating administrative and operational tasks. Especially for large-scale organizations dealing with a significant supplier base, automation can empower them to control the entire operation. Furthermore, it shortens the lifecycle time by accelerating the vendor management procedure. Organizations can get an edge over their competition with faster approvals, onboarding, and purchase.  

To learn more about vendor management solutions and CMS (Contract Management System), book a live demo today.