Proactively manage your energy & utility company’s vendor risks and contract compliance management process

Vendor Management Process Diagram

What is Vendor Management?

It is the process of managing, controlling and developing relationships and agreement with multiple third-party vendors and contractors to minimize third-party risk exposure, control costs, and drive service excellence. Energy and Utility companies need to ensure that the products and services provided by the third-party vendors are safe and complying with applicable laws, regulations and standards.

The Challenge

  • Energy and utility companies are continuously using multiple third-party vendors and contractors for supplying, mining and delivery of resources and for distribution. However, reliance on third- party service providers increases the complexity of risk management and exposes them to other company’s management and infrastructure risk. Failure to manage these risks can expose energy and utility companies to regulatory fines/penalties, reputational damage, financial reporting errors/monetary losses, litigation and might even hamper their ability to do business.
  • The increased regulations on the energy and utilities industry like, FERC (Federal Energy Regulation Commission), U.S. Commodity Futures Trading Commission (CFTC), Dodd-Frank Wall Street Reform and Consumer Protection Act to name a few, has significantly increased requirements for the management of third-party compliance. Ensuring that the products and services provided by third-party service providers are compliant with the applicable laws and regulations, including safety, both physical and environmental is a great challenge for energy and utility companies.
  • Energy and utility industry is highly regulated; closely watched by local, state and federal agencies, hence it is essential for energy and utility companies to properly manage their third party relationships.

Our Solution

  • Predict360 Vendor Management Software gives you the ability to centralize your energy and utility company’s vendor management process – all your suppliers, procurements, contracts and reviews in one place. Track and monitor your contracts and other vendor documents. You can also assign access rights and roles to different users in the system depending on their respective responsibility.
  • Energy and utility companies can document their agreements and track their billing processes and order distribution. It also provides the ability to manage risk and analyze the effects of vendor relationships on the organization’s risk index.
  • Our Vendor Management Software enables your energy and utility company to efficiently manage vendor risks and contracts and prevents it from oversight through a complete vendor management process.

Value

  • Energy and Utility Companies can benefit with the services provided by third party vendors and contractors while managing the risks posed by these vendors efficiently and effectively.
  • Energy and Utility Companies no longer have to rely on spreadsheets and word processing tools as these prove inefficient in meeting the stringent requirements of the auditors.
  • Streamlines energy and utility companies’ vendor risk assessment which includes surveys for audit-based risk management that helps assess risks in all regulatory compliance functional areas such as financial, operational, IT, brand, competency, internal audit, quality management, regulatory compliance and reputation with the ability to execute corrective and preventative actions directly from the results.
  • Manages third party performance and monitors third- party compliance with all applicable regulations and standards.

A simple 4 step approach to managing vendors

Managing vendors is difficult. Expectations on both sides are different and over a period of time the chasm is so wide and deep that it becomes difficult to move on. Also, the regulatory changes have made it mandatory for energy and utility companies to take an active interest in their vendors’ level of compliance with regulations and standards in the industry. Tracking compliance of the vendors is an additional cost for the energy and utility companies. Here is a 4 step recipe to reduce the cost and increase productivity.

Step 1: Standard Best Practices: Hire good negotiators, specify payment terms, trim the number of vendors; set up a vendor rotation scheme (every 3 years or so), do the 80/20 analysis of the goods and services obtained and so on.

Step 2: Ensure vendor compliance by analyzing the business processes. Determine which of these can be automated.

Step 3: Install Predict360 and configure it for Vendor Compliance management. Integrate with current Purchasing Department tools and any Enterprise Resource Planning (ERP) system.

Step 4: Use Predict360 dashboard to track vendor compliance. Take action from the Predict360 application in terms of filing vendor compliance reports, creating tasks.