Managing vendors is a complicated task – it goes beyond simply telling them what you need and them delivering the services.
What is Vendor Management?
Vendor management is the process through which businesses ensure that they have vendors that are capable, qualified, and trustworthy enough to deliver business critical services. Vendors are not a part of the business, but they play a crucial part in the business. Most businesses have a few vendors without which their work will become impossible, thus it is necessary to ensure that the business chooses the right vendors and forms productive relationships with them.
GRC solutions focus on, as the name suggest, governance, risk, and compliance. Vendor management intersects with all three of these domains. Managing vendors is a necessary part of good governance, because mismanaged vendors can disrupt business operations, which would be unacceptable. It is also necessary for risk and compliance – businesses need to ensure that their vendors have the certifications and qualifications required by regulations.
Confused? Here are 5 Reasons to Implement a Vendor Management System
Vendor management technology has thus become an important part of GRC solutions. The vendor management solution market was below $500 million in 2017 but is projected to go above $2 billion by the year 2025. This growth is driven by multiple factors. The technology is getting better and more productive. Costs are going down which is boosting ROI on these solutions. Cloud solutions are available which can be purchased at convenient monthly payment terms. These factors are creating an environment where having vendor management technology will be the norm.
GRC and the Vendor Management Lifecycle
GRC helps in every step of the vendor management lifecycle in a different way. The help ranges from better visualization of data and reminders to complete automation.
Assessment – the first stage
The first step is to assess the available vendors. This process is more complicated in businesses that are under a strict regulatory framework. Vendors that deliver services to the medical, financial, and energy sectors often need to have certifications and qualifications. GRC solutions automate this process. They keep a track of all the qualifications and certifications of vendors and alert management if any vendor does not qualify.
On-boarding – the second stage
The second step of the vendor management lifecycle is the first step of the vendor relationship management process. Once a vendor has been selected, they must then be on-boarded. Contracts need to be written up, certifications need to be collected, and service delivery terms have to be agreed. It is crucial that the needs of the business are communicated clearly to vendors. GRC solutions streamline the on-boarding process and manage all the documentation in one place.
Why we are focusing on GRC? Here you can get the answer Why do we need GRC Technology?
Ensuring service delivery – the third stage
After all the documentation is complete the vendor begins delivering the services they were on-boarded for. This is the domain where GRC solutions show their full potential. There is no performance tracking when vendors are being managed manually. GRC solutions have vendor master data – data that tracks everything about vendors. Any business that manages vendors manually will note down if a disruption occurs but that is the extent of vendor performance tracking in most organizations. GRC solutions enable management to easily track and visualize performance. If any vendor’s service quality shows a downward trend it is possible to communicate with them and course-correct before any serious damages or disruptions are incurred.
Off-boarding – the final stage
If the vendor was only hired for a single task, then the next step is to off-board them with proper documentation. The document management side of GRC solutions proves essential in this process.
Few months back we published Streamlining the Vendor Management Process which will surely help you in building the process.
GRC vendor resource management systems allow businesses to ensure that their vendors are qualified, their relationship does not run afoul of compliance, vendor risks are managed, and quality service delivery is ensured. If your business wants to improve vendor relationship management then you need to see what the Predict360 Vendor Management solution can do for your business. Get in touch with out team for a demo and a trial.
About the Company
360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.