If you are struggling to find the answers to the questions such as what is Vendor management? And who is a vendor? Then you have reached your destination. In this article, we will cover everything that you need to know about vendor management. But first things first, who or what is a vendor? Thus, to put it in simple words, the vendor is a professional term used to address the suppliers in the business, so the process of managing these suppliers or vendors is known as vendor management.

There are several practices that are covered under vendor management, and to name a few, it includes activities such as choosing vendors, contract negotiations, controlling costs, reducing vendor-related risks, and ensuring the delivery of services. So, it would be appropriate to say that vendor management is one of the most crucial functions of a business. However, the vendors may vary from company to company and are highly industry specific. The nature of the vendors can be as diverse as seafood suppliers, IT vendors, cleaners and even marketing consultants. Moreover, vendors can also vary in size from sole traders to large organisations, depending on your business and its requirements.

Why is Vendor Management an Essential Business Function?

Vendor management is essential for the organisation’s business functions for many reasons, and one of the most crucial reasons vendor management is important is that it plays a vital role when selecting from the list of available suppliers. Finding the right vendor for a particular business need can be a tricky task and can only be done by an experienced professional.

Additionally, organisations also benefit from vendor management to accomplish business objectives, such as utilising opportunities for cost savings, as well as taking steps to pace up the partnering speed with suppliers. The vendor management process also efficiently makes sure that all the risks associated with supply chain disruption are minimised and ensure that the goods and services provided are delivered on time and are delivered while adhering to the standards.

Apart from this, an effective vendor management process can help your business develop meaningful and strong relationships with your suppliers, which may, in return, lead to opportunities for negotiating better rates.

Vendor management benefits

The vendor manager roles and responsibilities include many functions, and all the functions have different benefits. Thus, if you want to know about the benefits of vendor management, here are a few significant ones:

• Enhanced vendor selection
• Incorporate and Build cost savings practices
• Speed up vendor onboarding
• Minimise the risk of supply chain disruption
• Improve and build better supplier relationships
• Negotiate and propose better rates

Vendor management process

Now that you know the answer to the question, what is vendor management and what are its benefits. Moving ahead, it is essential for you to understand what comprises the vendor management process. Give you a brief idea; here are vendor manager roles and responsibilities that build a structure for an efficient vendor management process:

1. Shortlisting Vendors:  Shortlisting vendors include researching, sourcing suitable vendors and seeking quotes via requests for quotation (RFQs) and requests for proposal (RFPs), as well as choosing and selecting vendors. While the price is certainly a major consideration during the selection process, companies will also need to evaluate other factors such as vendor’s reputation, capacity, and background, along with their ability to communicate efficiently when deciding which vendors to partner with or appoint for contracts.
2. Contract Negotiation:  It is essential to get the contract right at the outset and to make sure that the terms agreed upon benefit both parties. Negotiating a contract can be time taking, and the process includes defining the goods or services that will be involved, the start and end dates of the arrangement and all the other essential terms and conditions. The vendor manager roles and responsibilities involve paying attention to areas such as confidentiality and non-compete clauses at the same time.
3. Vendor Onboarding: Another essential part of the vendor management process is vendor onboarding. It involves gathering the documentation and information needed to set the vendor up as an authorised supplier to the company and ensure that the company will be able to pay the vendor for the goods or services provided by it. The vendor onboarding process also consists of essential processes such as payment information, procurement of information such as relevant licenses held by the vendor, as well as tax forms and insurance details.
4. Monitoring Vendor Performance: vendor management process involves administration as well. The companies must monitor and administer the performance of their vendors. This may consist of assessing their performance against performance indicators such as quality and quantity of goods or delivery dates.
5. Supervising and Managing Risk: Vendors need to be supervised only to avoid risks and blunders that can impact the company in irreversible ways. If the vendors are left unsupervised, the risk of compliance breaches, lawsuits, data security issues and loss of intellectual property increases. Thus, organisations need to monitor the risk that a vendor’s actions or a failure can cause to the goods and services as agreed may disrupt the company’s operations.
6. Payment: The Vendor Management process makes sure that the vendors are paid on time for the goods and services they offer, in line with the agreed terms.

How TRC Consulting Helps with Vendor Management?

At TRC Corporate Consulting, we provide you with the best accounting services that deliver exhaustive technical precision for all accounting functions, including vendor reconciliations. Our professionals are trained to create a deeper understanding of the organisation’s requirements before streamlining strategies for it. We are known to help organisations drive forward towards achieving business goals with the help of comprehensive business solutions.

You can contact us to get the best practices for vendor management and receive the required help to understand better the vendor management process that can benefit your business. So, go through our range of consulting and advisory services that include taxation, fixed asset reconciliations, GRC functions and much more. You can trust us as we can obtain accurate results within the specified deadlines. For questions, contact us!