Vendor management may seem like a simple enough concept. But with the rapid growth in technology, the new global scale of the economy, and the seemingly endless choice of suppliers, it’s more difficult than ever to find the best fit for your business.
In this article, the experts at Sling discuss strategies and solutions for improving your vendor management in order to give your business the best chance for success.
What Is Vendor Management?
In simplest terms, vendor management is the process of interacting with — and managing for mutual benefit — the third-party suppliers of goods, materials, and services to your company.
In theory, vendor management involves planning, implementing strategies, and optimizing interactions in order to maximize the benefits for your business.
In practice, though, this process is less about simply negotiating the cost of goods sold and more about creating closer, more collaborative bonds with your key suppliers.
Why Is Vendor Management Important?
Vendor management is essential to the success of your business because those third-party suppliers have a significant impact on the way your company and team operate on a day-to-day basis.
Reliable vendors improve your revenue stream and help your business grow at scale. Unreliable vendors, on the other hand, create bottlenecks in the way your team operates and produce more of a negative impact than you probably realize at the moment.
In fact, third-party vendors can have a profound effect on such key components of your business as:
- Transaction speed
- Inventory management
- Cost of goods sold
That’s why it’s vital to remain vigilant with your vendor management and always work to improve the relationships between your business and those with whom you work.
In the next section, we’ll discuss some strategies for successful vendor management that can help you in that regard.
Strategies For Successful Vendor Management
1) Aim For Value Over Product
Successful vendor management should be, first and foremost, about value, not just product. You can get product from multiple sources these days, but value only comes from a select few.
Build relationships with your vendors to get such perks as bulk pricing, discounts, tailored delivery dates, and any other variable that benefits your business.
It’s this value — not just the products themselves — that will help your business succeed.
2) Think Of Vendors As Partners
To improve your vendor management, think of suppliers as partners rather than just a source of goods and services. Make them feel like a part of your business and that they actually have a stake in your success.
This may involve giving them insight and access into the nitty-gritty of your business, but the rewards are well worth the effort.
3) Assemble A Dedicated Vendor-Management Team
One of the best ways to improve relationships with your suppliers is to assemble a dedicated vendor-management team.
Even if it’s just one person responsible for coordinating two or three vendors, the personal interactions they generate will pay dividends when it comes to getting what you need to keep your business running.
4) Create A Vendor Agreement
If you buy from a vendor on a regular basis, create a Vendor Agreement so that you and they know what to expect from the relationship.
A clear and effective Vendor Agreement includes such information as:
- Payment terms
- Delivery terms
- Product description
- Agreement duration
Take the time to work with your vendors to produce a well-documented agreement that satisfies both parties. Doing so will reduce the possibility of confusion and eliminate potential disputes.
5) Pay On Time
Your ability to pay vendors on time depends, in large part, on when you get paid for the products and services you sell.
When you make it a point to pay for goods and services on or before the due date — whether you’re paid on time or not — it proves that you are easy to work with and that you have vendors’ best interest in mind.
That translates into a stronger business-to-vendor relationship and a streamlined flow of products or services for you. It all starts with paying your bills on time whenever possible.
6) Analyze Risk First
Before getting involved with a new vendor, always analyze the risks first.
This usually involves getting references from other businesses and sitting down with the potential partner to learn about their experience and areas of expertise. It can also be helpful to review examples of their work to determine if it’s what your business needs.
Then ask such questions as:
- Are they financially stable?
- Are they competitively priced?
- Do they have the capacity to fulfill orders on time?
- How do they handle emergencies?
When you have a complete picture of the risks and benefits, you can make an informed decision about getting involved with that particular vendor.
7) Communicate Frequently
Open lines of communication are a key part of vendor management. Maintain clear and frequent communication with your partners in order to:
- Provide feedback
- Keep them in the loop as to your strategies and plans
- Congratulate them for their (and your) successes
- Let them know if some aspect of your relationship isn’t working
When you communicate regularly with your vendors, they’ll understand where they fit into your organizational strategy and how they can help your business reach its goals. That’s good for your business and theirs.
8) Get Everyone In Your Business On Board
To maximize your vendor management, get everyone in your business on board. Maverick spending — obtaining products and supplies outside of vendor agreements — is a major source overspending for many businesses.
Provide your team with a preferred vendor list and make sure they stick to it.
9) Consider Cultural Differences
In the global economy of the 21st century, you’ll likely obtain product from all over the world.
That means interacting with individuals from different cultures and different views on work. It also means dealing with variations in currency, tax rates, time zones, and communication habits.
All of these variables will affect how you do business with a vendor in another country.
10) Streamline Vendor Management With Technology
Vendor management relies heavily on the relationships you forge, but it also relies on staying organized and keeping all of your information in one place.
For that, it’s best to incorporate vendor-management technology into your workflow. This technology gives you the ability to manage purchase orders, track shipments, store vendor information, and much more — all from one integrated platform.
Vendor Management Helps Your Team
Maintaining a successful vendor management program may seem like an isolated part of your business that only affects your bottom line.
But strong supplier relationship management permeates everything your team does on a daily basis. It gives them a straight-forward and consistent process for purchasing and allows them to spend less time worrying about supply logistics and more time focused on their key responsibilities.
Strong and stable vendor management, coupled with reliable employee scheduling and communication, are the cornerstones upon which you build a solid and successful team.
Sling’s calendar-based user interface is intuitive and easy to master, so you don’t have to spend extra time learning how to make the app do what you want. The onboard artificial intelligence even notifies you of conflicts and suggests changes to make the process go smoother.
And because Sling is a cloud-based platform, you can make your schedule available to your employees anytime, anywhere.
In addition to powerful scheduling tools, Sling offers other advanced features, including:
- Time and attendance tracking
- Built-in time clock
- Labor cost optimization
- Paid-time-off control
- Overtime management
- Payroll reports
- Messaging and communication features
- Task list
These features give you unprecedented control over an inherently complicated and chaotic process and make it easier than ever to create the best schedule for your team and your business.
For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.