The businesses that provide services and goods to your company are called vendors.
Vendors are a fundamental part of a business and largely determine its success. Thus professionally managing the intel and relationship a business owner and their vendor shares is essential.
However, vendor management is often a foreign field for many entrepreneurs and CEOs, as its purpose isn’t extensively understood.
Despite what people might think, there’s more to vendor management than finding the cheapest vendors available.
Vendor management responsibilities include the following;
- Researching new vendors
- Acquiring quotes
- Negotiating contracts
- Managing vendor relationships
- Assessing vendor performance
- Making a payment to vendors
Managing vendors enables businesses to achieve the following and more; better pricing on goods, the prevention of overseeing hidden costs, and
the elimination of risky and unethical vendors.
As such, there’s a lot to keep on top of, which is why it’s essential to get the vendors organised and implement a system.
Create A Vendor Database
To simplify and increase the efficiency of sourcing existing vendors, creating a database that details every aspect of information required of a vendor is essential.
Here are a few categories to consider adding to a vendor database;
- Contact details
- Performance data
- Financial record
- Insurance documents
Compiling and categorising the above data into a database will, for example, reduce time spent by employees attempting to evaluate a vendor’s performance or find a vendor’s contact details.
Moreover, it will also prevent multiple employees from needing to manage and monitor vendor data.
Depending on a company’s budget and the number of vendors available, company owners can either create their database using Excel or Google spreadsheets. Or otherwise, hire a company to design and organise a secure company database for them.
Efficient Payment System
Paying vendors the correct amount on time is vital as part of building and maintaining a strong relationship.
However, with a dozen or more vendors to pay at different times of the week, month, or quarter, it can be difficult for even the most organised employees to keep track of.
As a solution, a dedicated filing system to, for example, organise your business checks and a diary to keep track of vendor payments will avoid the risk of overdue or missed payments. Which could break down the relationship between a company and its vendors.
Picture by Maksym Kaharlytskyi from Unsplash – CC0 Licence
Equally, investing in efficient software and systems to streamline payment processes and reduce time and money spent paying vendors will also assist. Examples include investing in sophisticated accounting software and check printing technology.
Choose a Qualified Employee
To ensure the new vendor management database and payment filing system is organised, managed and updated regularly. It helps to hire an employee with the following education and skills.
- A degree in either marketing, sales, business or similar and/or previous experience in a vendor management role
- Experience in a sales role will enable an employee to build rapport with vendors and negotiate better contracts.
- Excellent interpersonal skills will assist with speaking to a variety of vendors from different backgrounds.
- Research skills will ensure an employee can source new vendors that will suit the needs of the business.
- Multi-tasking skills are also desirable. Vendor management is a diverse role that requires an employee to fulfil an abundance of tasks throughout the day, from responding to vendors by phone and email to conducting research and writing contracts in between.
Suppose business owners are struggling to find an employee to fit the role. They may want to consider investing in a course for existing interested employees.
From researching ethical, and professional vendors to partner with and build a long-lasting relationship. To analysing the performance and prices from existing suppliers to ensure business owners are getting the best deal.
By creating a vendor database, payment filing system and hiring or training an employee to manage the vendors. CEOs can rest-assure their vendor management operations will run smoothly. As a result, they’ll have more time to concentrate on other important areas of the company.