The contingent workforce has become an essential component of any successful large organization, and, as a result, the vendors that your business works with are critical to your yearly goals.

Depending on how large your business is, you are probably already working with a few, or maybe even hundreds, of vendors. All of these vendors are likely to have different contracts, pay rates, and points of contact which all must be managed by one person or an entire team within your organization.

Despite this, many companies are failing to implement, or even understand, exactly what vendor management is and what is needed for a successful vendor management program. That’s why many companies are now outsourcing this role to a managed service provider (MSP) with expertise in vendor management.

Are you trying to learn more about vendor management? In this blog, HCMWorks will explain exactly what vendor management is, the process involved and what your organization needs for a successful program.

So, what is vendor management?

In its simplest term, vendor management is a process used by an organization to deal with external vendors and suppliers.

Vendor management includes everything from researching and sourcing vendors, obtaining quotes with pricing, capabilities, turnaround times, and quality of work, negotiating contracts, managing relationships, assigning jobs, evaluating performance, ensuring payments are made and much more.

This process is incredibly resource heavy and time-consuming for your organization. It’s not simply about finding a vendor that “gets the job done”, it’s about analysing your current vendors and the in-house processes your organization uses to establish an effective and efficient system.

What are the benefits of a vendor management system?

There are a plethora of benefits that your business can realize from an effective vendor management program. The vendors you use are essential to the success of your company, and a well-thought-out vendor management program will help you create long-lasting vendor relationships that ensure you get the best return on investment (ROI).

Vendor management will help your company:

• Reduce the costs associated with poor vendor visibility.
• Mitigate any supplier risks.
• Optimize performance and ensure that vendors are fulfilling their contacts and meeting your needs.
• Improve administration efficiencies.
• Create long-lasting relationships with vendors that you trust.
• Protect the values of your brand by only partnering with vendors that match your company’s ethos.
• Increase the onboarding speed of vendors to give you access to good and services far quicker than normal.

A successful vendor management program will help give your organization access to top talent within your industry, streamline your processes and boost revenue.

How does my company implement successful vendor management?

The creation of a vendor management program can be broken down into four clear steps, helping you to manage, analyze and perfect your processes:

1. 1 - Establish business goals and lay down what you expect to achieve through each vendor. To analyze performance and see where you need to improve or change things up, it’s important that you have clear performance parameters that you can compare.
2. 2 - Choose the right vendors. A vendor management program must have a process in place that allows you to carefully select the right vendors. Each vendor will have strengths and weaknesses, and you need to find the one that will work best with your company. The wrong vendor will result in lost time, inefficient operations and wasted money.
3. 3 - The management of your vendors is critical. It’s essential that your organization monitors and analyzes performance, ensuring vendors are meeting their agreed performance and output levels and that their contract is being met. This will ensure ROI.
4. 4 - Hit your goals to grow. The final step of vendor management is to constantly move the goalposts. If you want your business to grow, you will need to continually redefine your goals and ensure that your vendors are helping you to consistently hit them. If not, perhaps you have outgrown that vendor and need to move on.

Need help?

Vendor management is complex, and there are numerous ways your organization may benefit by outsourcing this process to an expert third-party.

HCMWorks is a vendor-neutral MSP which provides the expertise, technology and processes needed to help your organization transform its vendor management process. Want to learn more? Contact the HCMWorks team of experts today.