The process of an organization’s effort to control cost, decrease vendor-related risks, assure the best service deliverability that is possible and ensure value from vendors secularly can be described as Vendor Management. Questioning the difference between the term vendor and supplier is very common. In fact, both terms mean the same and can be used interchangeably. Whichever the term is being used, its effective management is crucial for organizations. An organization might work with a few or even hundreds of vendors, all of them with different contracts, pay rates and points of contact. This is why most companies have a vendor manager and care about vendor management a lot.
Vendor management is of great importance, the absence of information and negligence about issues such as vendor information and vendor performance rise supply risks for companies. In addition, employees have trouble deciding which vendors they are expected to buy from.
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Components of vendor management can be explained as; the research for best suitable vendors, sourcing and getting information about price, measurement of the quality of the work that is done, management of relationships when multiple vendors are present, performance evaluation with pre-set organizational standards and making sure that the payments are made in due time.
Most of the time, organizations use spreadsheets for vendor data. That is an ineffective method, as companies expand their operations globally and work with vendors from all around the globe, it is harder to manage with manual systems and to keep the information up-to-date. This is why most companies need a vendor management system. A vendor management system is a tool that helps organizations manage all vendor-related activities from a single platform. With a VMS tool, it is possible to maximize efficiency and long-lasting growth without wasting a lot of money for providing them.
Vendor Management and Vendor Relationship Management do not refer to the same meaning. Vendor Management is the term used for describing the whole process related to vendors, on the other hand, Vendor Relationship Management refers to the human component of the process. The vendors are represented by people and establishing good relationships with those people is highly important. Meaningful and long-lasting relationships with vendors have a positive impact on the performance and help to minimize vendor-related risks. There are VRM tools that simplify the process.
The first step to select the right vendor is identifying the business goals. With this step, it is possible to understand the requirements and expectations of each business unit. After identifying goals, it is best to assign a team that will act as an intermediary between vendors and business units. The next step is taking all vendor-related information and creating a database. Identifying the selection criteria is crucial, after that there is only one step left: evaluating vendors and selecting one of them.
After the vendor is selected, it is crucial to assess risks. When it is time for the contract, it is important to include all stakeholders in the contracting stage. After terms are established and KPIs are set, the next step is onboarding. The last step is evaluating performance, monitoring performance is essential for getting insights.
JetSRM Supplier Portal is a vendor management solution that enables businesses to perform supplier relationship management. JetSRM works 100% integrated with SAP, so companies can record all these data in the SAP system.
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