From cloud services to accounting platforms to project management software, burgeoning businesses are reliant on a variety of services across multiple vendors to operate and grow.
That said, with so many variables impacting vendor management, it’s no surprise that many business owners can feel a bit lost and intimidated.
However, without a proper way to manage vendors throughout the vendor lifecycle, your purchases, renewals, contract negotiations and more can get messy. From overpaying vendors to buying duplicate subscriptions, you risk getting a lot of money stuck in a swamp of software-as-a-service (SaaS) subscriptions.
To help you navigate the vendor management process, we’ve put together this guide. Here, you’ll find topics such as:
How to negotiate vendor contract for the best terms
How to choose the best vendor management systems for your business
How to mitigate and manage your vendor risk
How to streamline your vendor invoicing
How to conduct a vendor spend analysis
Tips to optimize your vendor management
Vendor management is the sum of processes and practices that businesses implement to regulate partnerships with vendors and procure the products, supplies, and services needed to operate a business. A top-notch vendor management program will effectively allow you to:
Furthermore, an effective vendor management program will shield your business from the common downsides of scaling with multiple vendors:
A proper vendor management process from vendor selection and onboarding to relationship management and analysis will take you far. All you need is the right support. Here’s how to manage your vendor performance in a way that works.
One of the most crucial facets of well-designed vendor management is control over spending patterns, SaaS procurement, and licenses. Here’s why strategic vendor relationship management is ideal for any business:
Alongside added spending control, vendor management grants you a top-down view of existing licenses and policies within your company and helps improve profitability.
A business that spends effectively will also know how to manage existing software licenses and acquire new ones as they grow.
Vendor management helps companies consider how many licenses they own at the time of a given purchase and compare it to how many they may need in the future to meet business goals. This process is especially vital when a business is:
Doing so is crucial to keeping license acquisition under control. By keeping a close eye on license usage, administrators can avoid sinking money on unnecessary services. Larger companies greatly benefit from this practice. Due to the frequent personnel changes inherent in enterprises, licenses that were bought by ex-employees often go unused and undetected.
On top of monitoring license ownership across your business, automated vendor management workflows allow you to:
Top-notch vendor management means you only pay for what you actually use. And best-in-brand license monitoring makes sure you’re using everything you pay for to its fullest potential.
Vendor management offers unprecedented visibility into a rapidly-growing spending category in most businesses. In fact, 38% of companies run almost entirely on SaaS, with SaaS spending projected to double by 2020 across multiple verticals.
That type of spending is not something you want to go into blind.
With the right vendor management system (VMS), you’ll have the visibility you need to gain valuable, money-saving insights like:
Visibility is only useful when it’s easy to access and easy to understand. The ideal vendor management platform will keep all relevant vendor data in a central location and make them user-friendly and searchable.
While some companies are thriving under almost entirely cloud-based operations and vendor management software, most still rely on vendors outside the digital world for support. These areas may include supply chains, consulting services, transportation, food services, and more. That’s why your vendor management strategy can’t stop at SaaS.
When vendor risk management crosses over into the non-software world, it not only becomes about visibility and control, but also about human interaction. Make sure you adhere to these vendor management best practices:
Visibility and control of your SaaS spending are your lemons. Now, it’s time to make lemonade.
A well-designed vendor risk management system will also feature automated controls and communication programs that allow you to optimize your spending based on the vendor information at your disposal.
The first and best feature? A vendor management system attached directly to your corporate card.
When you find a corporate card program with a built-in spend and vendor management, suddenly, your financial world opens up. Here’s what makes integrated vendor management ideal for businesses:
Vendor management in procurement is the controlling of goods and materials you are obtaining for business purposes. This is done to increase a business's profitability and ability to negotiate with vendors.
Ramp has built-in spend management, vendor management, and other cutting-edge services small businesses can use to increase profitability and growth.
Vendor management is a complicated ordeal that requires a lot of insights and maintenance, not to mention practice. Here are a few best practices to consider:
IT vendor management is the process of regulating, sourcing, and selecting vendors based on your IT department’s needs. This can include contract management with tech and software providers, negotiating or modifying contract terms, and maintaining legal compliance.