The success of your business is greatly dependent on the effectiveness of your planning and tactics. You already know how business conditions change every minute, and how critical it is to make decisions on time. Contracts and vendors are a very crucial part of every business. Every business will be engaging with some sort of contract for sure. Doesn’t matter whether they are advanced contracts for tactical services/products, or standard lease contracts, handling the vendors effectively is important. One easy way to handle this responsibility well is to learn the best practices and make sure you are following them with perfection.
In this blog, we will be discussing the 10 best practices for successful vendor management. Along with general vendor management practices we have also tried to acknowledge vendor management best practices related to vendor assessment and performance. Let’s first brush up on your knowledge about various sensitive areas in vendor management.
Table Of Contents-
- What is your Vendor Management Strategy
- How are you assessing vendors now?
- Why follow Vendor Management best practices
- 10 proven Vendor Management best practices
- Switch to a Centralized Vendor Management System
- Automate Vendor Management Processes
- Get notified of important vendor updates
- Vendor onboarding and compliance management
- Tighten data security
- Implement vendor scorecard and risk management
- Get external collaboration capabilities
- Document collaboration and versioning
- Associated contracts and vendor history
- Get an automated vendor management software
What is your Vendor Management Strategy
Are you familiar with setting up vendor management strategies and finding ways to follow those processes accurately? If not, we recommend you start thinking about it. Spending time on a vendor management strategy might look very rewarding at first but it is a must-do activity for a business that has a good number of vendors to collaborate with.
The requirement is to strengthen and nurture your relationship with a third party who is going to play a critical role in assuring good quality services or products for your business. Your Vendor Management Strategy will ensure 5 things:
- It guarantees all negotiated outputs are delivered.
- All compliance demands are met.
- Business workflows are not disrupted.
- The maximum value is achieved without unexpected issues.
- Finding those vendors who are not performing as expected.
How are you assessing vendors now?
Vendor assessments are not a much talked about subject. Different companies approach this process differently. Small businesses used to assess their vendors by sending them a questionnaire earlier. Large enterprises used to have vendor management software with integrated performance assessment capabilities. Today, vendor lifecycle management solutions are a standard technology available for all kinds of businesses. Dock 365’s Vendor Management Solution is a great example of such a solution that can be utilized by a 10-member organization as well as a 1000-member enterprise.
Why follow Vendor Management best practices
By following best practices in vendor management, you can enhance your vendor experiences. Along with helping you gain better outcomes from your investments and contracts. The core objective is to simply help you improve your vendor management strategy and thus guarantee the best performance from your vendors.
If you follow the best practices and apply your business strategy efficiently, you will get more value from your vendor community, and it also helps you establish better relationships with third parties. Let’s now get to know about the best practices in detail.
10 proven Vendor Management best practices
The best practices mentioned here are derived from general techniques, assessment methods, and other recommended processes to enhance vendor relationship quality.
1. Switch to a Centralized Vendor Management System
The first thing you always need to assure is the easy access and availability of contract and vendor data. The main reason modern businesses switch from traditional paper-based contract management to cloud-based contract and vendor management solutions is this ease of access. You should eventually shift to a vendor management software solution that offers centralized vendor data and documents.
2. Automate Vendor Management Processes
An automated vendor management portal can make things easier. Along with guaranteeing data accuracy, you can also assure easy document collaboration. Avoid unwanted delays that may even make your vendors frustrated. It allows you to maintain a better professional relationship with your vendors, by leaving a good impression.
3. Get notified of important vendor updates
You should stay updated about all major updates and activities regarding your contracts and vendors. Modern Vendor Management Systems come with advanced notification facilities. Along with contract expiry and renewal notifications, you should also get notified and acknowledged about any vendor status change. You should have complete data about your vendors and any status change taking place. It is mandatory to handle vendor risk successfully.
4. Vendor onboarding and compliance management
Vendor onboarding is another low-profile area so far, which is very sensitive in setting the right experience for the vendor right away. To assuring a positive tone for future collaborations, this easy onboarding is crucial. You can allow your vendors to enter their details. It helps you to build trust and assure data accuracy. Tracking compliance-related information is also critical.
5. Tighten data security
Cybersecurity is another sensitive issue contract and vendor management software should address in today’s world conditions. Dock 365’s Vendor Management Software is assuring this making Microsoft 365 tools and especially SharePoint, its base platform. Microsoft technologies and security features are world-class, and you can always bank on them no matter what. Microsoft-powered business solutions are also recommended for small businesses that cannot invest in dedicated cybersecurity monitoring tools.
6. Implement vendor scorecard and risk management
One of the easiest and most common vendor management best practices is to implement a vendor management scorecard. It helps you to evaluate the performance of the vendors and analyze the risk involved. Vendor Management Solutions now comes with integrated scorecard and risk assessment features. The dock allows its vendor management add-on users to set risk status for each vendor based on their collaboration. This helps in risk management and assures proactive reactions for mitigating risk.
7. Get external collaboration capabilities
External collaboration has become a must-have feature for vendor management portals. As vendors/parties are usually people outside your organization, this is an inevitable capability. Document collaboration and a self-service portal to update their critical data including contact details and other sensitive information.
8. Document collaboration and versioning
Document collaboration is now possible with people outside your organization too. With Microsoft 365 and SharePoint-powered vendor management systems, you can make use of the document versioning feature to track all edits and changes easily. It allows you to avoid document duplication and review easier.
9. Associated contracts and vendor history
Dock 365’s VMS comes with a bunch of unique features. The associated contracts section on the vendor details page is one such feature. From the associated contracts section, you can see all contracts engaged with the vendor. This is very helpful when reviewing vendor performance and for taking critical decisions in contract management processes.
10. Get an automated vendor management software
Even if you are following most of the best practices above, and still don’t have an automated vendor management software, then you are missing a lot of great capabilities. Dock’s Vendor Management Solution comes as an add-on with our Contract Management Software. It offers a lot of other additional features including multiple potential integrations, advanced document management, reporting, and obligation tracking options.
