Your company probably relies on a wide range of vendors and suppliers to provide the goods and services needed to operate. Regardless of industry or business type, your vendors and suppliers play an important role in the success of your business. However, they can also present a number of challenges and risks.
Probably one of the biggest challenges that you might face when dealing with a large number of vendors, is keeping track of contracts and contract renewals. Particularly, if your company operates in a heavily regulated industry which may require complex contracts and risk assessments. A vendor management system (VMS), like Vendorly, can be a valuable tool to manage vendor contracts effectively.
What is a Vendor Management System?
A VMS is a software platform that is designed to help businesses manage their relationships with vendors and suppliers.
Some of the key features that are may be included in a VMS are:
- Vendor and supplier database management
- Contract management
- Invoice management
- Performance tracking and analysis
- Compliance tracking and management
How Can a Vendor Management System Help You Keep Track of Vendor Contracts?
One of the key features of a vendor management system is contract management. A VMS can help businesses manage their vendor contracts more effectively in a number of ways, including:
- Centralizing Contract Information
One of the biggest challenges that businesses face when it comes to managing vendor contracts is keeping track of all the different contracts that they have in place. With a VMS like Vendorly, businesses can centralize all of their contract information in a secure SaaS application that can be accessed at any time from anywhere. Think of a VMS as a centralized document repository for all vendor contracts.
A VMS can also give you a level of security that you may not have if you’re just keeping contracts in a shared drive or on a single computer. Having a secure repository ensures that only authorized stakeholders, like your legal team, have access to the latest version of the contract.
- Automated Contract Renewals
Many vendor contracts have a set term, after which they need to be renewed or renegotiated. Keeping track of contract renewal dates can be a time-consuming task, and it’s easy for contracts to slip through the cracks. With a VMS, businesses can automate the contract renewal process. For example, Vendorly can send out reminders when contracts are due for renewal, and can even automatically initiate the contract negotiation process.
Another way that a VMS can help is automatically notifying you when important milestones are approaching leading up to the contract renewal date. This helps to ensure that contracts are not overlooked and that all important deadlines are met.
- Tracking Contract Performance
When a business enters into a contract with a vendor or supplier, there are certain expectations about the level of service that vendor will provide. A VMS can help businesses track contract performance over time, providing you valuable insights into a vendor’s performance. This can help businesses make informed decisions about which vendors to work with in the future.
For example, a VMS can capture and track key performance indicators (KPIs) and metrics related to vendor performance, such as delivery times, quality of goods or services, compliance requirements and adherence to contractual terms. This data can be used to track performance over time and identify areas for improvement.
Vendorly can also provide scorecards and dashboards that allow stakeholders to monitor vendor performance in real-time. These dashboards can display key metrics and KPIs, along with visualizations that help stakeholders quickly identify areas of concern. A strong VMS will also provide you with a method of generating performance reports that can be shared with others.These reports can be scheduled to run on a regular basis, and can be customized to include the metrics and KPIs that are most relevant to your organization.
- Managing Compliance Requirements
Many vendor contracts come with compliance requirements, such as data security and privacy requirements. A VMS like Vendorly, can provide automated alerts when compliance requirements are due, and can help businesses ensure that they are meeting all of their compliance obligations. Managing compliance should be a critical part of any risk mitigation strategy.
A part of risk avoidance is having the tools necessary to identify and manage compliance risks. That’s why a good risk mitigation plan is to invest in a contract management solution that can help you prioritize compliance efforts.
A VMS can also assist with audit and inspection management by providing tools for scheduling and conducting audits, tracking audit findings, and managing corrective actions. This can help ensure that your vendors are meeting regulatory requirements and that you are prepared for audits and inspections. Being able to perform risk assessments ahead of time can mean the difference between remaining in good standing with regulators or facing fines or other severe penalties.
- Improving Communication with Vendors
Effective communication is essential for successful vendor management. A VMS can help businesses communicate more effectively with their vendors by providing a centralized platform for communication. This can help reduce misunderstandings and improve overall communication between your business and its vendors.
Messaging and collaboration tools within a VMS can allow you to communicate with vendors in real-time. This can include instant messaging, email, and other communication channels, as well as collaborative workspaces where you can share documents, project plans, and other information.
A VMS may also be able to provide vendor portals that allow vendors to access relevant information about their contracts, orders, and payments among other things. This can help streamline communication and reduce the time and effort required to manage vendor relationships.
A VMS can also give you the necessary tools to provide performance feedback to vendors, allowing you to communicate performance expectations and provide feedback on vendor performance. This can help improve vendor performance and strengthen relationships with vendors. This can also give you an opportunity to work with your vendors quickly if you start seeing performance issues starting to develop. A VMS can be configured to send automated notifications and alerts to vendors when there are changes in contract terms, orders, or other relevant information.
Managing vendor contracts can be a complex and time-consuming task, but a vendor management system can help to simplify the process. By centralizing contract information, automating contract renewals, tracking contract performance, managing compliance requirements, and improving communication with vendors, a VMS can help businesses manage their vendor relationships more effectively and efficiently.
If your business relies on a large number of vendors and suppliers, Vendorly could be an essential tool for helping you stay on top of your vendor contracts. Need help finding vendors that have already been vetted? Vendorly has over 50,000 vendors in its database who have been onboarded and vetted by other organizations like yours. Getting started with Vendorly is easy, just click here to request a free demo.