In a modern business environment, procurement paradigms are more complex than ever before. The entire field now relies on a relationship-based model that exists between business managers and vendors. Building these relationships is a vital part of a healthy and stable company.

HelpNet Security has reported about the potential pitfalls of businesses handling third-party vendors manually. If a firm has to manage 100 third-parties, the costs can exceed $26,000. Protiviti’s 2019 Vendor Risk Assessment notes that only 30% of firms have a “fully mature vendor management system”.

Vendors are often far more than simply providers of goods and services. They often create partnerships that last for many years. That’s why it’s important to invest in a digital platform that gives you the freedom to grow and strengthen that relationship over time.

Taking A Closer Look At Vendor Management System (VMS) Technology

You could call a VMS platform an integrated web tool that functions as a single node for every vendor-related activity your organization engages in. VMS platforms should ensure that everything is being done in the most cost-effective manner possible. By investing in VMS technology, you can keep these lines of communication open while also potentially slashing costs by a considerable amount.

Elements Of A Functional VMS Platform

Finding the right VMS platform for your business is a journey that takes time. It is not only a matter of the software that you choose. The technology and the organization need to be perfectly aligned. You also want to be sure that both parties can work together seamlessly avoiding manual processes. Perhaps the most important and obvious aspect of any VMS platform is its ability to requisition and approve individual purchases.

We can identify the following elements:

  1. Purchase Requisition Process
  2. Vendor Credentialing and Selection
  3. Due diligence
  4. Order Confirmation Journey Communications

Purchase Requisition & Approval Workflows

Not every company has a streamlined process to manage purchase requisition. This leads to inefficiencies and delays when everything is handled by email or hard copies. It is not unusual that these processes require different approval steps and people are not always available. And what about budgets and internal compliance? This can add more manual work, increasing the overall burden.

When your staffers make a request through a Vendor Management System platform, there’s a chance that it can be automatically approved based on their current needs. The same can happen for their requested budget. Managers can also instruct a VMS to approve or delay new purchases based on the importance of the projects. But besides automatic approval verification, the main goal of a VMS platform is to assure that every step of the process is streamlined. People don’t need to ask or search in their company directory to understand who to write to. If managers are not physically available they can always review the requests remotely. No more emails back and forth, which means a lot of time saved.

Vendor Selection

Whenever the purchasing responsible approves a request, a vendor has to be selected in order to complete the process. Vendor Management System platforms guide you to find the right vendor based on several metrics that you can customize. Once they’ve done so, it’s easy to segment potential options based on category, location and business unit. They can then help firms to perform needed due diligence. This ensures that every supplier is compliant with all the local and international regulations.

Credentialing Potential Vendors

Due diligence consists of performing a needed risk assessment and ensuring that every potential vendor is financially stable and technologically updated. VMS technology can help you to credential each vendor to verify that and assign ratings based on specific information relevant to your business.

Security and compliance issues are part of the process as well. For instance, healthcare providers have to ensure that their vendors comply with HIPAA rules and manage their data in a secure fashion. The same applies to other highly-regulated industries such as Financial Services and Insurance.

Once this has been sorted out, it’s important to manage the rest of the order journey. This journey includes quote requests and approvals steps before the order confirmation (OC). A good VMS platform can streamline the entire process. Additionally, you can integrate third-party software that allows you to perform a background check and legal reviews.

Process Automation Features Of VMS Solutions

A combination of strong artificial intelligence features partnering with automation technology can lead to some drastic improvements in your current business operations. Supplier onboarding, invoicing, procure-to-pay (P2P) processing, and many other workflows can be tedious and repetitive nature. This makes them slow and prone to human error.

VMS solution or through APIs integrations with your ERP system, like SAP, Oracle and Quickbooks can take care of these tasks. Some companies prefer to streamline their processes with a mix of technologies and platforms, others focus on reducing the number of applications.

Since automation drastically reduces human error, there’s much less need for manually cross-checking and data entering. The overall throughput is much greater, which means that approval workflows are completed in a timely manner. Companies that automate their vendor onboarding process will have a full vendor profile for each supplier with only one repository instead of several files and emails. That makes monitoring vendor performance and compliance a breeze by comparison.

Optimizing & Automating Due Diligence by Using Smart Forms

Smart forms offer one of the easiest ways to streamline these processes. On the client-side of the equation, managers can check to ensure that their vendors are compliant. Managers can also verify that vendors already have all of the necessary documentation stored in a centralized location. By configuring a dedicated repository to store this information in, vendors are sure to attract additional clients who might otherwise have taken too long to establish whether or not a company was financially sound.

Improve Your Vendor Relationships With Virtus Flow

Virtus Flow has put together solutions to help you manage your vendors saving time and reducing human errors through the use of a mix of Digital Workflows and Smart Forms to customize your journey end-to-end.

Whether you expect to deal with a single vendor or several hundred, you want to integrate automation into your organization’s workflows. Contact Virtus Flow today for more information on how your business can streamline the most repeated tasks without ever having to touch a single line of code.