Vendor management workflow process is a system designed to help businesses manage vendors more efficiently and accurately. One huge problem that companies run into is human error when filling out multiple forms and processes.
Vendors then are likely to take advantage of this human error which can, unfortunately, lead to overspending or underspending. Automating the shipping and receiving workflow reduces errors and increases the accuracy of a variety of processes including the vendor onboarding process, vendor risk management workflows, vendor collaboration user requests, and more!
Vendor management workflow ensures that all external vendors comply with regulations. Additionally, according to the WorkMarket In(Sight) Report, 78% of business leaders believe that automation increases employee productivity.
Companies should highly consider implementing more innovative systems for vendor management. Vendor management workflow can largely improve business processes, operations, and compliance with standards.
Below are the essential vendor management workflows every business should have to have an efficient and unobstructed business.
Vendor selection process
For the majority of businesses, there are dozens of vendors that they could reach out to or contact. Thus, the vendor selection process is an integral step of the procurement strategy. Ideally, potential and third-party vendors must be selected based on a specific criteria, focusing on what they offer.
This would then have a large process on the supply chain management between various stakeholders. There are many different ways to choose a vendor, however, it is very common for a manager, financial professional, budgeting representative and human resources contact to all be involved in this process.
Expectedly, this decision process is timely and meticulous. Having an automated and efficient vendor selection process would save time and resources for the company. Clearly, it is very important to evaluate vendors before selecting them.
Above all, it is important the organization analyze its own business needs and how this vendor’s services/products can best align with the business operations. With a clear goal in mind, key features to keep in mind would be project details, pricing, deadlines, services and more. After meetings and general rough planning, organizations can then begin to choose their interested vendor. From this process, companies recognize how important and long this process can be.
Vendor onboarding Workflow
Once chosen and part of an agreement with the company, vendors can begin the onboarding process. This process is also very important as it sets the tone for the partnership, the expectations, and further clarifications on either party’s side of the collaboration. By implementing more automation processes in the onboarding, this process can be done more efficiently and with less miscommunication.
For example, vendors should be able to easily access all relevant information about the procurement process in one spot, during the training. As well, vendors should easily be able to submit requests. In order to do this, procurement teams require an intuitive plan for vendor onboarding to run as smoothly as possible. One benefit of using automated vendor onboarding processes includes having more effective long-term onboarding processes.
Traditionally, onboarding is a one-time event. In the future, companies will shift towards onboarding becoming an ongoing event. This is integral to avoiding costly and time-consuming mistakes. Additionally, as there are many different ways to onboard vendors, using different methods keeps the information and understanding up-to-date. In the long term, vendors and businesses will better understand their systems and goals; achieving strong collaborations and higher compliance workflows.
Invoice approvals
Another feature of automated vendor management systems is related to invoice approvals. At large organizations, invoice approvals involve multiple steps such as: purchase order approval, compliance with regulations, verification from shipping and receiving workflow and more! Thus, using a manual approach to the invoice approval process is inefficient and costly. Implementing criteria for an automated invoice reduces human errors and saves time.
Contract Approval is a portion of the vendor management workflow system that often causes problems and takes a long time to complete. By implementing automation software, organizations can avoid typing out new contracts repeatedly, printed and courier copies and waiting for long periods of time. Instead, business and legal teams will be able to review and negotiate terms and corrections from their own system.
For example, the Vendor management workflow system in Jetdocs allows teams to review vendor proposals directly, online! With improved communication and a more transparent ability to make direct edits and changes, this stage of the shipping and receiving workflow will not be so stagnant. With Jetdocs business teams will now be able to approve or reject contracts within seconds.
Vendor information management
Vendor information management is an integral part of vendor management workflows. Using a Vendor relationship management software allows employees to view all the vendors’ data in one select place. This strongly benefits administrative efficiency, contract tracking and performance. Thus, vendors will appreciate organizations that understand and know who the company is and what your goals are before contact.
The company can then focus on ensuring visibility and constant communication with the selected vendor. The goal of a vendor management workflow is to improve communication and organization between various departments within a company and the external vendors.
Creating a centralized vendor management workflow is integral to an organization’s ability to track and evaluate vendor performance. Problems such as supply chain disruption, lack of purchase order approvals, and stagnant response to contract renewals are all issues that can result due to disorganization.
With one central location, there is no duplication of effort and files. Certain predefined parameters of the automated process ensure that the organization’s goals and objectives are being met through the vendor’s services/products.
With these select features, vendor management processes are able to further streamline customization and choice; vendors can be best chosen for expertise and abilities. Essentially, without this management process, companies would have a very difficult time managing all their vendors.
Vendor performance rating
Vendor performance ratings provide companies with insight as to what is occurring with the vendors. The goal of this feature is to aid departments in managing relationships better. For example, vendors can earn points based on their performance, marked against the agreed terms.
This is especially important for measuring supplier performance; especially as it relates to quality and consistency of the supply. The goal of having a vendor performance rating system is to develop transparency between all parties. This appears as increased negotiation power and opportunities, similar growth of both businesses and contract compliance rates.
Additionally, creating well-defined vendor management policies provide clear goals to align with a business’ overall strategy. Clear data points identified, and risk assessment guides should be established to best facilitate vendor selection. Above all, these performance related features focus on maintaining long term and ongoing relationships.
Benefits of vendor management workflow
There are many benefits of automating vendor management processes, as has been mentioned through the article. Above all, automation reduces errors often made by humans and improves the accuracy of work. For example, an automated system allows vendors and organizations to automate repetitive tasks to free up resources.
This means that both vendors and employees can spend more time on core competencies, rather than administrative hassles. This creates a proper approval process- freeing up used resources. Additionally, vendors are usually more ecstatic to work with automation because they know what they will be expecting. Various vendor management software also include processes to manage multiple accounts for different departments or goals.
Thus, vendor management processes should be automated, which can be done in a variety of ways, if possible. Overall, there are countless benefits to an automated vendor management process related to the shipping and receiving workflow of products/services.
Consolidated vendor relationship
The reason strong vendor management workflow systems are encouraged is to help build strong relationships with vendors. More specifically, stronger vendor management processes helps businesses negotiate more beneficial terms with the vendors. Again, this is because vendor management is about maintaining the relationship between vendors.
This applies to external/third-party vendors and any potential vendors (possibly internal). The end goal of implementing vendor management software is because well-written and thoughtful processes allow companies to purchase better products and services (for the company’s goals). This is because, throughout the process, users can better identify the goals, objectives and risks of the company compared to if the same user were to walk through the steps without any processes.
Due to all these benefits of having vendor management processes as a structure, companies are now considering implementing vendor management processes before anytime a new project is started.
Greater value for your money
Still not convinced? Vendor management processes truly provide greater value than money. With this system, performance evaluations are provided so that users can review how well vendors are performing in relation to their promises. Evaluations aren’t simply quantitative but qualitative as well! Additionally, coming with a strong evaluation feature process, contracts potentially for renewal, renegotiate and termination can be clearly justified.
As a reminder, strong vendor management systems are there to help organizations choose the best vendors based on cost, quality and service. Yet again, the goal is to steer away from choosing vendors due to personal relations.
Furthermore, vendor management workflows create a central repository of data, once again saving communicative inefficiencies between employees. Finally, these systems implemented drastically reduce operational costs by reducing the overhead expenses- specifically by establishing strong selection processes. Overall, vendor management software systems have much greater benefits than what meets the eye.
Cut down on vendor risks
A Vendor management workflow can help with a key difficulty when working with vendors. It can help cut down on vendor risks. For example, implementing a thorough vetting process, it significantly cuts down the risks that vendors could pose. One guideline that could be implemented is teams need to know what data access apps would be required and exactly which employees can access and work with them.
Additionally, by ensuring that vendors have the infrastructure to safely store and transfer data, it keeps companies’ data safe. Essentially, vendor risk assessment is integral to the security strategy of an organization or business. To establish a strong vendor risk assessment system, companies must thoroughly identify vulnerabilities, assess a variety of risks in all degrees and work together to develop mitigation strategies.
Finally, it is advised that companies develop a formal process for managing risks. For example, what is the workflow when there is a minor mistake? Who should be contacted? When must a report be filed? These are all questions that need to be asked when establishing a strong vendor risk assessment.
Better contract management
Vendor management processes can also provide better contract management. Expectedly, contracts play such an important role in the success of business. Implementing the most fit contract management software can drastically impact the efficiency and profitability of a project or company. This is essential to companies as a properly managed contract saves both time and money. For example, ensuring that all vendors are certified before starting work is a feature that this process can take on!
Additionally, attaining clearances from required documents clearly avoids uncertainties without too much delay. Another beneficial feature would be the ability to understand next steps after signing a contract. By providing a structured approach, contract management proves to be rewarding and efficient. By using Jetdocs, employees can easily and efficient create a streamlined contract workflow!
Better administrative work
Coming as no surprise, creating strong vendor management systems improves administrative work. Centralized vendor managements provide a site of truth and accessibility for all vendor information. Not only does it provide more visibility, but it also allows for stronger oversight and control over external/potential vendors. Additionally, even simple implemented solutions can largely reduce operational overhead administrative processes.
One very important aspect that could be affected is contract and file management between vendors. This process can always be tweaked and personalized to the vendors specifications and objectives. Overall, vendor management workflows can be constantly edited to improve administrative efficiency and communication.
At the end of the day, the better the administrative work can be completed, the more organized the company as a whole is. This once again shows the importance of establishing strong shipping and receiving workflows.
Compliance management:
Compliance management, as part of a vendor management system (VMS) is another useful tool for managing vendors or supplies. More specifically, both internal and external compliance managements are equally important for any organization. Essentially, a strong vendor management workflow creates seamless communication with departments to confirm that the selected vendor complies with internal and external factors.
Implementing compliance management ensures that vendors and organizations comply with federal and state laws— to protect against penalties and fines. For example, compliance management ensures that organizations consider the scope and importance of 3rd part relationships before signing contracts. Healthcare and financial service companies should consider seeking compliance certifications. Overall, compliance certifications are an influential way to build brand loyalty.
Improves transparency:
Finally, vendor management systems provide organizations more visibility with all components of their work with vendors. For example, with this system, vendors status and information can be conveniently managed through online portal. Additionally, a centralized database creates summaries and overviews of company data. Another feature that support transparency is automated tracking of all relevant information related to vendors and their relationships.
A vendor management process essentially helps organizations comprehend which vendors are thriving and which ones aren’t. Companies are then able to investigate why this is the case. Finally, vendors that don’t comply with the organization’s policies/procedures could harm the company’s reputation and future projects. Working with a vendor management workflow software, like Jetdocs, prevents this from occurring.
Conclusion
In conclusion, a strong vendor management workflow software works hand in hand to a company’s objectives and journeys. This workflow touches upon all steps of the relationship between the vendor and the company. This includes the selection, maintaining communication throughout, mitigating for risks, contract renewals/negotiations and more. Each organization must define the set of processes that best fits its goals and overall structure. This process can look entirely different across industries or company sizes, for example.
With that being said, vendor management is all about creating business goals and KPI’s together; before and after engaging with the potential vendor. Well thought out databases help in managing all vendor-related efficiently, whether this be a centralized location or clear communication channels. Without vendor management processes, companies would not be able to choose the most suitable vendor based on individual needs. Companies need to use these processes in order to best evaluate vendors based on their own abilities to meet company needs.
After all, the more frictionless your vendor management process is the more likely you are to achieve their revenue goals and have frictionless operations.
