Good Vendor Management Strategy = Year-Round Results

by Ashley Poynter

Content Manager

How a Good Vendor Management Strategy Can Deliver Year-Round Results

Why does a good vendor management strategy need to be a priority? For starters, vendors are an extension of your business. They’re essential to everything from delivering products and services to maintaining your brand’s reputation. So, if your vendor management approach is ad-hoc or inconsistent, you’re opening the door to risks that could impact your operations and reputation.

Why a Good Vendor Management Strategy is Non-Negotiable

What a Good Vendor Management Strategy Entails

Don’t Have a Good Vendor Management Strategy? Here’s What’s at Risk

Year-Round Benefits of a Strong Vendor Management Strategy

How Automation Enhances a Good Vendor Management Strategy

A Good Vendor Management Strategy Isn’t Seasonal

Get Ready for Vendor Management Day 2024

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Why a Good Vendor Management Strategy is Non-Negotiable

When it comes to vendor management, having a well-thought-out strategy is essential. It allows you to ensure smooth operations, protecting your brand, and maintaining compliance. In other words, a lackluster strategy, exposes you to more risks. Your organization becomes vulnerable to security breaches, operational disruptions, and compliance issues.

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A strong vendor management approach sets you up for long-term success by streamlining processes and building stronger vendor relationships. In this article, we’ll explore why a robust strategy matters, what it should include, and how automation can enhance every step, allowing you to realize year-round benefits that go beyond simply managing vendors.

What a Good Vendor Management Strategy Entails

So, what makes a vendor management strategy effective? It’s about having a comprehensive approach that covers every stage of the vendor lifecycle, from onboarding to offboarding. Here are the key components:

Onboarding

The onboarding process should verify vendor credentials, confirm compliance with regulations, and ensure that vendors meet your company’s standards. To be clear, this isn’t just about getting paperwork in order. It’s about conducting thorough checks to minimize risks from the outset.

Monitoring

Once you onboard vendors, it’s crucial to continuously monitor their performance. This includes regular audits, and regularly monitoring changes to sanctions lists. Continuous monitoring ensures that vendors continue to meet your standards over time.

Payment & compliance

A good strategy includes a clear, efficient process for managing payments. This reduces the risk of errors, and ensures that all transactions comply with regulatory requirements. This also involves setting up secure payment methods to minimize fraud risks.

A comprehensive vendor management strategy ensures that every interaction with your vendors is controlled, consistent, and aligned with your organization’s goals. Additionally, it builds stronger vendor relationships. Those relationships thrive when you set clear expectations and maintain a structured process from start to finish.

Don’t Have a Good Vendor Management Strategy? Here’s What’s at Risk

Neglecting vendor management can expose your organization to a range of risks. Here’s what’s at stake if you don’t have a solid strategy in place:

Non-compliance

If you don’t manage your vendors effectively, you risk falling foul of regulations. Subsequently, this can lead to fines, penalties, or even legal action. In regulated industries, compliance isn’t optional. A lack of vendor management oversight means you might miss critical requirements, such as verifying tax IDs, checking for sanctions, or ensuring data protection.

Listen to Ben Lao, Head of Procurement, Ryan LLC, talks about compliance gray area and the headaches (and stress) caused by manual processes that aren’t always airtight:

Security risks

Every vendor ecosystem has its vulnerable points. Without a good vendor management strategy, you’re not only increasing the likelihood of data breaches but also leaving the door open for fraud. Fraudsters are quick to exploit weak points in your vendor onboarding process, so if you’re not checking for red flags, you’re at risk.

Disruptions

Poor vendor management can lead to supply chain disruptions, delays, and misalignments with your customer service or internal operations. If you’re not nurturing your vendor relationships, you might find yourself scrambling to deal with late deliveries, quality issues, or miscommunication.

In short, skipping on a good vendor management strategy means opening yourself up to risks. These risks can affect your finances, reputation, and operational efficiency. But there’s a way to avoid these pitfalls—automation.

Year-Round Benefits of a Strong Vendor Management Strategy

A robust vendor management strategy is more than just a set of processes—it’s an investment that pays dividends all year long. With the right strategy in place, you’re not just reacting to issues as they arise; you’re proactively managing vendor relationships in ways that consistently enhance efficiency, security, and cost savings across your organization.

Smooth operations, all year round

With a solid strategy, you’re building a foundation for predictable, reliable operations. Vendors are onboarded with care, so you’re not dealing with hasty setups or last-minute compliance scrambles. Instead, you have a process that ensures each vendor is vetted and aligned with your standards, reducing the risk of disruptions down the line. Regular performance monitoring ensures that any hiccups are addressed before they can impact your business, keeping things running smoothly through every season.

Enhanced compliance and reduced risk

You can’t set and forget compliance; it’s an ongoing requirement that you need to stay on top of as regulations change. Subsequently, a good vendor management strategy includes regular checks and updates, ensuring that you’re always in line with the latest standards. Year-round compliance means fewer surprises during audits and peace of mind knowing that your organization is protected against potential fines and penalties. Plus, a consistent approach to vendor data verification and monitoring means that you’re always a step ahead of fraudsters, with fewer vulnerabilities to exploit.

Improved vendor relationships

A thoughtful vendor management strategy nurtures relationships with your vendors, treating them as partners rather than mere transaction points. When vendors know what to expect from your process, they’re more likely to meet your standards and align with your business goals. This leads to stronger, more productive partnerships that yield long-term benefits, from more favorable terms to better service. With open lines of communication and clear expectations, you’re building trust that makes it easier to negotiate, innovate, and grow together.

Strategic cost savings and financial benefits

Good vendor management goes hand-in-hand with smart financial management. By consolidating vendors, tracking tail spend, and negotiating favorable payment terms, you’re unlocking cost savings that can be reinvested into your business. Over time, these savings add up, contributing to your bottom line year-round. And if you’re using automation, you’re also able to take advantage of electronic payment methods that bring rebates and reduce processing costs, making every dollar go further.

Scalability and flexibility

As your business grows, your vendor needs will evolve. A well-constructed strategy provides the flexibility to scale up seamlessly. Whether you’re entering new markets, expanding product lines, or working with more vendors, your strategy should be built to adapt, ensuring that you can handle increased volume without sacrificing quality or security. This scalability means that you’re ready to meet new challenges without missing a beat, no matter what the year brings.

In essence, a strong vendor management strategy is like having a well-oiled machine that consistently supports your organization’s goals. Investing in a strategy that yields year-round benefits enables you to manage vendors more effectively—and create a resilient, adaptable process that adds value to your business at every turn. With the right approach, vendor management becomes a continuous source of operational excellence and competitive advantage, keeping you ready for anything that comes your way.

How Automation Enhances a Good Vendor Management Strategy

Automation is like having a personal assistant that takes care of all the tedious, error-prone tasks involved in vendor management. Automation streamlines processes, making it easier to manage vendors efficiently, ensure compliance, reduce risks, and even improve vendor relationships. Let’s dive into how automation can elevate each aspect of your vendor management strategy.

Why Manual Processes Pose Risks

Picture this: you’re managing dozens of vendors with a system that relies on spreadsheets, emails, and phone calls. Each time you need to onboard a new vendor, it’s a flurry of PDFs, manual data entry, verifying tax IDs, chasing down documents, and organizing approvals. Sound familiar? This kind of system might have worked when your business was small, but as your vendor base grows, manual processes quickly become a recipe for chaos.

Inefficiencies

Without automation, vendor management is riddled with inefficiencies. Different departments might be inviting the same vendor multiple times, leading to duplicate records. Redundant vendors pile up, creating a mess of data that’s nearly impossible to track. Even if you have internal mandates pushing for efficiency, the majority of vendors still end up being paid by check—adding to your workload and leaving you with less visibility into your payments. Worse yet, bad actors love checks. Just ask Financial Crimes Detective Marc Evans:

Risks

The manual process doesn’t just slow things down; it also opens the door to significant risks. For one, keeping track of compliance becomes a near-impossible task. If you’re manually verifying tax IDs, addresses, and banking details, mistakes can easily slip through the cracks. On top of that, when vendor data isn’t centralized, there’s no simple way to ensure that everyone in an approval role sees the most up-to-date information. Changes come in through unsecure channels like email or phone calls, and approvals get logged outside of your ERP, usually in scattered spreadsheets or email threads.

Fraud

Then there’s the issue of fraud. Manually managed vendor data often lacks the oversight needed to catch red flags. Fraudsters know this, and they target organizations with weak processes, slipping through gaps where there’s no system to verify banking information or check sanctions lists consistently. Not to mention, it’s nearly impossible to ensure adequate insurance coverage when your data is scattered and manually managed.

Onboarding new vendors is a pain point, too. When business units are constantly reaching out to vendors for documentation via email or snail mail, the entire process drags. The vendor desk is then left to decipher and organize these submitted documents, often spending more time on mundane paperwork than on strategic work. And with no automated system to notify business units about the onboarding status, they’re left wondering if their vendor is set up properly—unless, of course, they call the vendor desk repeatedly for updates.

In the end, manual processes create more work, expose your organization to fraud, and leave you in a constant scramble. It’s not just a headache; it’s a system that holds back your business from achieving real efficiency and security. And that’s why it’s time to consider the alternative: automation.

Transforming a Good Vendor Management Strategy With Automation

Imagine a vendor management system that handles the heavy lifting for you. No more manual data entry, no more chasing down paperwork, and no more double-checking compliance details by hand. With automation, all the complex, time-consuming aspects of vendor management transform into a streamlined, intuitive process that practically runs itself.

From the moment you invite a new vendor, automation takes over. The system guides vendors through secure, auditable workflows, ensuring they provide all required information before they can even start working with you. There’s no risk of duplicates or redundant vendors because automated checks match new records with existing tax IDs and other identifiers. And with built-in approval workflows, you’ll never have to worry about unauthorized vendors slipping through. Every vendor goes through a standardized vetting process, eliminating maverick spend and keeping rogue vendors out of your system.

Benefits beyond onboarding

But the benefits of automation go beyond onboarding. With a centralized dashboard, you can see payment statuses, cycle times, and compliance metrics in real-time. Instead of sifting through emails and spreadsheets to track who’s been paid, you can adjust your payment strategy with just a few clicks. Need to increase your Virtual Card spend? Automation can drive digital enrollment continuously, helping you maximize rebates and keep tail spend under control. And with all this data at your fingertips, you’ll have a clear view of your spending habits and can make strategic decisions that save both time and money.

Automation also revolutionizes compliance and security. Instead of relying on phone calls or third-party tools for one-off verifications, the system runs continuous compliance checks. Tax IDs, banking information, and even sanctions lists are monitored automatically. If anything changes, the system triggers a new approval workflow, ensuring that your vendor data is always up-to-date and accurate. For domestic ACH payments, automation platforms provide a built-in risk assessment, offering an extra layer of fraud protection that leaves liability in safer hands.

Don’t forget audits

And perhaps best of all, automation makes the entire process auditable. Every approval, every change, and every action is tracked with a digital trail, so you’ll always know who approved what and when. This level of transparency not only supports compliance but also provides valuable insights into bottlenecks, helping you identify and eliminate delays. With automated reminders, items awaiting approval never fall through the cracks, keeping onboarding and payment workflows moving smoothly.

With all of these advantages, it’s easy to see why organizations that switch to automation wonder how they ever managed without it. By taking manual tasks off your plate and adding layers of security, visibility, and control, automation doesn’t just improve vendor management—it transforms it into a strategic asset that supports your organization’s goals, day in and day out.

A Good Vendor Management Strategy Isn’t Seasonal

A strong vendor management strategy delivers results that aren’t just seasonal—they’re year-round. By ensuring compliance, reducing security risks, and protecting your brand, you’re setting your organization up for long-term success. And with automation, you’re adding an extra layer of efficiency, control, and security that helps your strategy adapt to changes and challenges as they arise.

So, if you haven’t already, now’s the time to invest in a vendor management strategy that aligns with your business goals. And don’t stop there—embrace automation to streamline processes, reduce risks, and improve relationships with your vendors. By making vendor management a priority, you’re not just managing your vendors—you’re building a resilient, scalable, and efficient operation that’s ready for whatever comes next.

In a world where vendor relationships are critical to success, having a strong, automated vendor management strategy is your best tool for ensuring that those relationships work in your favor, delivering value for your organization throughout the entire year.

Get Ready For Vendor Management Appreciation 2024

We’re LESS THAN ONE WEEK AWAY from our second annual Vendor Management Appreciation Day (VMAD)!

Will you join us?

Why? Because there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.

Join us in observing Vendor Management Appreciation Day (VMAD)! We’re gearing up for the 2024 celebration, and we want you to be a part of it!

VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.

Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.

In the meantime, learn more here, and grab some free vendor management goodies.