8 Benefits of Using a Vendor Portal for Vendor Management

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April 18, 2022 Business

The main idea to invest into vendor management software is to maintain expenses and provide quality service and keep mutual benefit relationships with vendors.
This approach helps an organisation to categorise vendors by contract, relationship, metrics together with ensuring the required number of vendors are available for any product at any given time. This mitigates the risk of stock-outs, low quality, and manipulative pricing that can happen if you don’t make a clear vendor management business process.

As organisations continue to extend their geographical areas of operations to include a global reach, the need to automate the vendor-client relationship has never been direr. Combining various criteria and modus operandi is only possible with an online portal that displays required information in form of dashboards and visual keys.

A vendor portal enables the online performance of the above mentioned activities. All vendor related activities are organised and run by this software application helping companies to meet their objectives, avoiding operational gaps and ensuring maximum value is derived from the vendor relationship. A vendor management system brings about higher levels of efficiency and the ability to scale operations in a cost-effective manner.

Vendor/supplier management has the following advantages:

1. Vendor Selection criteria

Factors such as financial health of the vendor, industry accolades, similar experience in previous transactions with other companies, regulatory compliance, and legal history can be gathered by the vendor management software system to categorise and validate all the required information. From this data, the system will recommend a preferred supplier to start a business relationship with, depending on their aggregated evaluation. Automation of the supplier on-boarding and pre-qualification process also reduces the cycle time.

2. Evaluation of Supplier Performance

This has been made possible by setting performance benchmarks to evaluate suppliers against them. Key performance indicators (KPIs) measure pre-set parameters to ensure an effective vendor management process. Dashboard reports give an analysis of the supplier performance at a glance enabling faster decision-making. This in turn mitigates the risks associated with lack of visibility of the supplier performance. Corrective action can be issued to vendors to avoid future lapses in their performance.

3. Seamless Communication

A vendor management system removes the need for email communication and the slow process of information sharing. To ensure your needs are effectively met by your vendors, timely relay of information is paramount. Updates on delivery process, invoices, changes in the forecasts, should be done in a timely manner to ensure there is no compromise on quality and service.

4. Vendor Data Directory

One of crucial criteria to make a successful vendor management system is to guarantee confidential client’s information. This may be in the form of vendor contracts, certificates, tax documents, and bank details. As the organisation continues to grow, the vendor management system allows for the secure storage and retrieval of data of the multiple vendors in the company records. Your vendors need to be assured that all information is in a safe place.

5. Vendor Collaboration

A vendor management system allows for the organisation to include the vendor in its strategy execution. The vendor, representing the subject matter expert, can be invited to share insights on a particular product related to the organisation’s offering. This leads to better decision-making in terms of innovation, suggestion on reducing cost of production, elevating the company’s competitive edge. Building these long term relationships with vendors ensures business success maintaining a steady stream of cash flow.

6. Risk Minimization

The client-vendor relationship has risks defined by the following factors:

· Compliance and data security

· Financial status

· Operational performance

· Adherence to SLAs

Active certification requirements, document trackers, vendor alerts and audit trails are all risk monitoring and mitigation measures to ensure the vendor performance satisfies all client requirements.

7. Strategic Partnership

The vendor management process is usually defined by nurturing long term relationships which maximises the value of the vendor to the client. Short term engagements will only give short term gains and cost savings. The sharing of information and commercial objectives will give the client access to exclusivity, discounts, and preference over others. The close alliance between the vendor and the client is what brings value to the business.

8. Supply Chain Consolidation

Having the vendor as part of the client’s business from the beginning creates a culture of unity and full disclosure. This relationship has incentives for both parties and therefore, it is to their benefit to keep it going. This consolidation of players in the supply chain also streamlines the purchase and budgeting process in the client’s organisation.

In Conclusion

Access to global markets as well as the competitive edge provided by efficient systems, are two of the most important factors affecting vendor management. A vendor Portal will not only enable the business to streamline its operations, it will also enable the vendor to keep its records up to date, avoiding disruptions in its business. Performance measurement will ensure both parties are able to achieve their business objectives.