Enterprise vendor management is critical for modern business operations, especially for regulated organisations. For senior procurement professionals and CFOs, managing vendors effectively is about: Below, we explore how specific enterprise vendor management features can help you achieve the above and generate better business outcomes. It involves overseeing and coordinating relationships with third-party suppliers to ensure that services and goods are delivered efficiently and cost-effectively. This modern approach, underpinned by dedicated vendor and contract lifecycle management (VCLM) software, creates a structured approach to managing vendors, from selection and negotiation to performance assessment and risk management. By focusing on these components, businesses can enhance efficiency, control costs, and achieve better outcomes. What is enterprise vendor management?
Challenges of traditional vendor management
Traditional vendor management approaches rely on manual processes and siloed information captured in spreadsheets, shared drives and even a contract owner’s head.
When vendor contracts are difficult to find, vendor performance isn’t reported on, or their obligation fulfilment has an unknown status, the level of risk in your organisation increases.
Other common challenges of traditional vendor management include:
- Reliance on paper-based records, spreadsheets, and manual data entry leads to errors
- Time spent on administrative tasks instead of fostering stronger partnerships with vendors
- Limited visibility makes it difficult to identify cost-saving and risk mitigation opportunities
- Poor renewals management minimises opportunities for renegotiation and increases the risk of revenue leaks
- Procurement functions working in silos to the rest of the organisation, preventing cross-functional optimisation of the supply chain
- The potential for non-compliance based on poor communication and collaboration with vendors
Hindered efficiency, non-compliance, poor business outcomes and operational disruption all make it difficult to demonstrate the value of the procurement function.
Enterprise Vendor Management Features for Procurement Teams
As a procurement professional reporting to the CFO, your focus within enterprise vendor management is ensuring cost savings and mitigating risks within the vendor landscape.
A McKinsey report suggests that automation of vendor management tasks can lead to cost reductions of 30-50%.
Using VCLM software that promotes visibility, control and compliance through automation will help you demonstrate the value of the procurement function and achieve your goals.
Below are the enterprise vendor management features that you should prioritise.
1. Branded Vendor Portal for Seamless Onboarding
A dedicated Vendor Portal centralises all vendor information, giving your organisation and its third parties total visibility of contracts, performance scores, communication threads and upcoming dates.
Vendors can access self-service features to update their information and submit documentation required for compliance. This reduces the administrative burden on your organisation.
Building your vendor management processes around a dedicated portal can lead to more collaborative relationships with your vendors. It allows you to foster trust, potentially leading to better service and pricing during the renegotiation phase.
Collaborate with vendors via a branded vendor portal
2. Best Practice Vendor Management Workflows
Best Practice Workflows allow you to implement your pre-defined processes straight away, ensuring that everyone involved adheres to established best practices.
Establish seamless, standardised and automated processes that can elevate the procurement function, freeing you up to focus on strategic initiatives.
Pre-built vendor and contract workflows - powered by automation - are designed to help you get to value, faster. Here are a few examples:
- Automated Vendor Onboarding: Streamline data collection, document verification, and risk assessments, expediting the onboarding process and reducing the risk of errors.
- Vendor Contract Review Workflow: Route contracts electronically for review and approval, ensuring timely completion and adherence to established protocols.
- Vendor Contract Amendment Workflow: Manage contract amendments efficiently, involving all stakeholders throughout the process for a streamlined and transparent experience.
- Vendor Performance Tracking Workflow: Monitor key performance indicators (KPIs) and receive automated alerts for potential issues, allowing for proactive intervention and improved vendor performance.
Watch our webinar below to see our workflows in action.
3. Smart Forms for Enhanced Vendor Compliance and Performance Management
According to a 2023 report by Bain & Company, 60% of procurement professionals report challenges in measuring vendor performance effectively.
This can lead to revenue leaks, business disruption and subpar outcomes. It can also put a strain on your relationship with the vendor relationship itself.
Choose a VCLM platform that offers Smart Forms, enabling you to score, monitor, and improve any vendor’s performance without the need for spreadsheets.
Smart Forms integrate with quantified scoring and risk escalation workflows, giving you a complete view of vendor data. This allows for informed decision-making and effective risk mitigation so you can support objectives related to cost-consolidation, regulatory compliance and maximising outcomes.
An example of a Smart Form
4. Third-party risk intelligence for finance, cyber and ESG
Conducting thorough due diligence during vendor selection - and after onboarding - is a time and resource-intensive task when done manually.
It also exposes regulated businesses to additional risks.
VentureBeat reports that 54% of organisations were breached through third-parties over a 12 month period.
When procurement professionals are equipped with automatic, in-depth risk insights about their vendors, they can:
- Quickly evaluate viable vendors that are best suited to organisational goals
- Negotiate more favourable terms before onboarding and at renewal
- Simplify due diligence and stay ahead of regulatory requirements
- Proactively address issues such as financial downgrades or compliance breaches
- Make informed decisions about consolidation or rewards for the vendor base
The Market IQ Suite simplifies compiling data from reliable sources to offer a comprehensive risk profile for each vendor. It sends automated alerts when there is change in a vendor’s status, empowering procurement teams to take early, remedial action to protect their business.
A view of the Market IQ Suite dashboard
5. Spend dashboards for optimising costs
Controlling spending and optimising costs is a key objective for procurement teams, especially when reporting to the CFO. Data silos of invoices, forecasts and contracts can be a nightmare.
VCLM software allows you to import your spend data, as well as integrate with any major third party Financial and/or ERP systems such as NetSuite. No more relying on silos, spending hours searching for data or explaining revenue leaks.
See your actual vs forecast spend, and spend per category, in one easy-to-read dashboard. These insights empower you to identify opportunities for consolidation, negotiate better pricing with vendors, and develop strategic sourcing plans for specific categories.
Watch our webinar to find out more about optimising financial control with VCLM.
Wrap Up
By leveraging enterprise vendor management software, procurement professionals can experience a strategic shift in their daily work.
Increased efficiency, enhanced compliance, and stronger vendor relationships all contribute to cost savings, reduced risks, and ultimately, the CFO’s goals for the business.
To find out how more about how enterpries vendor management can improve your business, book a demo.
