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How to Choose the Right Vendor Management Solution

Image of Charles Dauber
Charles Dauber

Wouldn’t it be great if you could have all your vendor information in one place? Keeping track of up-to-date vendor information can be a hassle - involving web searches, phone calls, and emails. And if the same vendor is being used for different departments? That creates a whole new set of data problems. Instead of hunting down vendor details and contracts, consider using a vendor management solution.

When you use a vendor management solution, the records and all the associated details you need are in one location, your data is clean and verified, and you won’t ever have to hunt for contact information again. Vendors are an integral part of your supply chain and picking the right vendor management solution for your organization can be a turning point for your company.

What is a vendor management solution?

A Vendor management solution (VMS), is a software application, often web-based, used by organizations to manage their suppliers. Managing suppliers goes beyond administrative tracking. The vendor management process includes everything from sourcing and onboarding vendors, to monitoring performance and managing risks. The right solution can provide the visibility you need to optimize your supply chain, while minimizing risks and lowering your costs.

A comprehensive and unified VMS provides the following:

  • Standardized vendor sourcing and onboarding. Finding new vendors typically requires hours of web searching, phone calls, and emails. It’s time-consuming and not a good use of your time. A VMS offers a centralized platform where you have the ability to source for new vendors which streamlines the sourcing process. By standardizing how your current and new vendors register ensures you have clean and correct data, as well as being able to capture the data that is most important to your company. This could include certifications, qualifications, operational readiness, and more.
  • Managing contracts. Tracking bids, negotiating terms, contract start and end dates, and keeping all vendor contract information in one place minimizes security risks by providing a unified solution for document storage and sharing between the vendor and the entire team of stakeholders.
  • Monitoring performance. Providing visibility of the quality and deliverability of your vendors, as well as performance, allows you to easily track transactions, review performance against key performance indicators (KPI), like on-time delivery and quality of goods.
  • Facilitating risk management. A good VMS solution evaluates the risks of a supplier by assessing factors such as reliability, quality of goods, and past performance. VMS facilitates managing risks by providing ongoing monitoring of all supply chain processes.

A checklist to choose the right vendor management solution

What features should you look for when considering a Vendor Management Solution?

1. Centralized Vendor Information

A good solution will record and centralize the vendor information, so you don’t need to look at ten different sources, such as spreadsheets, emails, and notes. When searching for a vendor record in a VMS, the system works as a single source of truth for all vendor information, such as:

  • Complete corporate information — including company overview, locations, size, website, social media accounts, and contact info.
  • Supplier Status — approved or not​
  • Operational status — including inventory, lead times, supply chain, size of workforce.
  • Product / services details — technical specifications, catalogues, price lists, notes.
  • Public ratings — industry qualification information, ratings, including financial.
  • Self-registration info — if applicable, the details of the vendor portal for self-registration.

2. Performance and Risk Management

The VMS should aid in the risk assessment process; monitoring and measuring risk using a quantitative approach. This includes inherent risk and residual risks. The system should quantify the impact of onboarding a particular supplier and monitor current suppliers for potential risks. You can prepare vendor scorecards to evaluate performance. In addition, having a central content management system fosters collaboration. The entire team has visibility of the vendor’s current and past performance at a glance which saves time and costs.

  • Captures performance metrics — including feedback/ratings from operations, warehouse, service/support. Measure KPIs including quality, delivery, safety, service performance.
  • Collects internal feedback — for performance improvement​.
  • Manages performance reports — including KPI documents, performance reviews, quality and compliance audits.

3. Contract and Document Management

We spoke about the need for central and secure document storage for each supplier. A good VMS should have a repository not only for contracts and legal paperwork, and the shared storage should provide role control access to ensure documents don’t end in the wrong hands or get lost.

  • MSAs, scope of work documents
  • Supplier documentation like quality certificates, site visits, safety records, diversity certifications, and reports

4. Integration (ERP systems etc)

The VMS should integrate and complement your ERP systems easily and quickly. Sharing data between the ERP system and the VMS should be seamless. Look for a solution that includes:  

  • A user-friendly interface
  • Can handle the flow of information important to your company
  • Doesn't duplicate tasks
  • Easy and fast implementation and onboarding

5. Reporting and Exporting Tool

A good VMS allows you to generate and export different types of reports — bid reports, tier 2 spending, contracts, supplier diversity, approved vendor lists, and more.

  • Automated report generation
  • Tier 2 reporting and spending including aggregating data for on-demand reporting
  • Automated supplier notifications

6. Automation and Optimization of the Bidding Process

Bids require managing a sizable quantity of documentation, and for companies without a centralized system, it can be hard to keep track of where you are in the bid process, who you sent out the bids, when they are due, and who has responded, especially if you create numerous bids monthly. A good VMS allows you to see bid history, create bids, bidder lists, send out the bids, receive responses, and award the bid to the most qualified vendor. By being able to analyze bid history from previous bids, you can analyze and rank past bidders according to performance, quality, deliverability, and your cost savings. 

  • Automated bidding and searching for pre-qualified vendors
  • Ability to follow a process, see its history, operational status, and feedback from other companies. Finally, you can export the process to your ERP system.

Discover the best vendor management solution for your mid-market organization

A vendor management solution helps create efficiency across your organization, but also protects your organization from risk and unnecessary expenses because of failure to properly monitor vendors. Partnering with the best vendor management solution can mean the difference between struggling with vendor information and management and a program that can optimize your supply chain, reduce vendor risk, and lower costs.

Warm Commerce will allow your supply chain to stay nimble, source hard-to-find vendors to lower costs and increase competition, scale up or down to meet your organization's demand, respond quickly to vendor risk, and pivot to capitalize on new opportunities. To learn more, contact us.

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