Picking the right vendor management software in 2019
Vendor Management Software or a Vendor Management System (VMS) allows companies to manage their vendors including but not limited to collecting requisitions from departments, shortlisting & onboarding new vendors, managing their ongoing performance & compliance. It is typically a web based – cloud hosted software that allows collaboration with vendors and third party servicers. In regulated industries like the credit and collections industry, vendor management would mean managing the risk associated with third parties by classifying the types of vendors, risk associated with them, and on-going due diligence.
A lot of times even vendor management is outsourced to a third party to reduce the administrative burden of managing vendors. Such vendors who act as liaison between a company and its vendors are called Managed Service Provider (MSP). An MSP is a vendor backed by people and supported by technology. An MSP may have their own system (VMS) to manage all their vendors or may use their clients’ systems.
History and Evolution of vendor management software
With the advent of technology when companies are always looking for ways to streamline their vendor management program and reduce their administrative burden using automation, vendor management software came into the picture in the early 1990s when Ford subsidiary called Geometric Results, Inc. (GRI) created a manual vendor management system called PeopleNet. It became automated in 1995 and later was bought by MSXI who then launched it into multiple industries. At the moment there were hundreds of vendor management softwares that helped automate the tasks and manage vendors.
Evaluating a Vendor Management Software
There are many vendor management software providers like Contractor Compliance, Gatekeeper, VendorInsight, Procurify, and Kissflow Procurement Cloud but not all of them have what a company might require to fulfill its needs. For a Small and Medium sized Enterprise (SME), a tool as sophisticated as SAP Fieldglass may be an overkill. To evaluate the best system for your company, you need to first identify the challenges your company faces today and in what areas you want the system to help you. For example, for a company in Credit & Collections Industry or Account Receivables Management (ARM) Industry, the most important factor is the ability to oversee Vendor Compliance and Performance.
How a vendor management software can help companies optimize functionality
Standardization and Centralization of Vendor Management
Lack of standardization often results in inconsistent vendor management activities and lack of centralization causes a lot of redundant effort. Because vendor management software provides centralization, it helps save a lot of time at the time when all the data is required to be presented for a vendor, say at the time of regulatory audits.
Publishing Vendor guidelines
A solid compliance framework starts with first having the right set of policies & procedures on how a company should manage its vendors and also service level agreement (SLA) that a vendor should abide to with regards to the client. This is especially the case in regulated industries where auditors are not only looking at a company’s work standards but are also evaluating vendors’ work standards and how they keep up with the clients. Vendor management system allows publishing guidelines across the company and across all vendors and ensure vendors are kept up to date of the SLAs.
Onboarding and Ongoing Due Diligence
Shortlisting new vendors or onboarding a new vendor is always a daunting task. It takes a lot of time and effort in evaluating a new vendor and a vendor management software makes it much simpler by use of automated workflows. Internal approvals also are made easier with the inbuilt workflows within the system.
Trend analysis on data
Since the data across the company for different vendors reside in disparate systems, collating it together to identify the trends and getting insights from it is hugely difficult.
Top features of a vendor management software
Vendor Policy & Procedure Tracking
A vendor management system should allow tracking of company’s policies & procedures that it requires the vendors to abide by with automated version controlling and an approval process. It should also have ability to publish these to the vendors using the platform and track their acknowledgement.
In the cases where a vendor is directly communicating with a company’s customers, it is important that any complaint that the vendor receives is handled timely and properly. The client should be able to see the complaint received, respond with its comments, and get it resolved in accordance with its SLAs.
RFI and Audit Management
A functionality that allows publishing RFIs to shortlisted vendors and audit questionnaires to existing ones will help in removing inefficiencies in the process by automating a lot of workflows and eliminating redundant work. It should allow preparation of automated audit reports based on responses received from the vendors and company’s existing guidelines.
Business Intelligence tools
Needless to say, in a world where data analytics plays a crucial role, a functionality that allows collation of all the data from the past across all the vendors will help in understanding the trends and in turn improve the performance and reduce the cost associated with errors and audit findings.
Making Vendors Lives easier
The tool should facilitate collaboration not only internally within the company but also with the vendors. The vendor should not feel that using a system is a burden for them but should make it easier for them to work with the client.
Explore our compliance management system IPACS.