January 23, 2024 | Procurement Software
How can businesses mitigate risks, sail through uncertain times and build resiliency?
Achieving all these objectives may seem extremely difficult, but there is surely a way to succeed — by building a strong vendor network.
In fact, it won’t be wrong to say that businesses that can build a strong vendor network and effectively manage this network are the ones that can thrive amid growing uncertainty.
That’s because they can stay prepared at all times and effectively respond to disruptions.
As supply chain disruptions have become more frequent than ever in recent times, businesses across industries have struggled with unforeseen supply shortages. In some cases, these shortages have extended for long periods and hampered production activity.
As a result, effective vendor management has assumed tremendous significance, especially for vendors who supply critical raw materials and components.
Additionally, relying merely on vendor master data in the ERP system is no longer sufficient to identify suitable suppliers or to evaluate their performance.
Advanced vendor management solutions provide all vendor information in one place in a single, intuitive interface. They enable procurement to capture detailed supplier information and maintain comprehensive supplier profiles. They also provide procurement with a comprehensive set of vendor management tools to simplify supplier relationship and performance management.
With a single database of suppliers across all procurement functions — from source to pay — vendor management solutions provide a single source of truth that helps to avoid any confusion between different stakeholders. This also means that all stakeholders can access the same data and information at the same time.
Additionally, vendor management solutions continuously monitor supplier data and performance and provide actionable insights that can help procurement identify potential risks as well as savings opportunities. Procurement can get 360-degree visibility of supplier performance with the help of qualitative and quantitative scorecards, survey forms, questionnaires and comprehensive action plans.
By tracking performance against qualitative and quantitative benchmarks, procurement can engage in fact-based performance reviews. It can also set automated alerts and status updates to discover and fix supplier performance issues before they turn into a bigger problem.
One of the key responsibilities of procurement teams is to identify and choose suppliers that are just right for the business. The selection of a supplier must be done based on several parameters.
With an advanced vendor management solution, procurement can access comprehensive intelligence to streamline sourcing and supplier selection.
Vendor management solutions can evaluate suppliers based on multiple parameters that are vital for the business. For example, they can look at past performance and delivery track record. They can also look at specific requirements such as sustainability performance and regional presence.
Additionally, with a vendor management solution, procurement can analyze data to accurately determine risks associated with a supplier. By comprehensively assessing risks, procurement can make an informed decision and choose the right supplier.
Vendor management solutions not only help monitor supplier performance and contractual obligations, but they also have an effective mechanism in place to aid underperforming suppliers and improve their performance. They follow a structured approach to mediate poor performance issues.
To enable active interaction and collaboration with suppliers, vendor management solutions provide the right supplier engagement model, effective governance structure and a number of joint activities. They define action plans, assign stakeholders and measure the results of all supplier engagements.
With a simple and effective mechanism to manage all supplier relationships, vendor management solutions make supplier-driven innovation possible. Close collaboration helps suppliers better understand business objectives for the near and long term and encourages them to come up with innovative ideas and products.
Learn how GEP’s vendor management solution can benefit your business.