How to improve Vendor collaboration with effective Vendor Management Solutions
With increased outsourcing and heightened regulatory concerns, it has become imperative for enterprises to manage their relationships with vendors. The regulatory concern has heightened dramatically in recent years, mainly because enterprises are outsourcing more services and technology. There are significant penalties for not adhering to these regulations or protecting the highly sensitive information. In the light of this, organizations need to organize their vendor relationships and create robust vendor management policies, while achieving and maintaining compliance and adhering to increasingly stringent regulations.
While the most important part of vendor management is to share information and priorities with your vendors, a sound vendor management program will better prepare your business for dealing with such third party vendors.A sound Vendor Management program helps build relationship between the customers and vendors and contributes to the overall financial health of the enterprise. A well-managed vendor relationship will result in increased customer satisfaction, reduced costs, better quality, and better service from the vendor. The true purpose of a vendor management program is to maintain quality vendors and quality relationships.
To ensure successful implementation of a vendor management program, it is important to:
- Conduct a Risk Analysis
Enterprises need to identify the importance of the vendor to the organization, the nature of the activities that will be performed and the inherent risk of the activity. It is only when the risks are known that effective measures can be implemented to counter them.
- Document the Vendor Relationship Contract
To properly manage relationship, a strong contract with the vendor is essential. All vendor relationships,irrespective of the risks must be defined in written contractsto avoid disagreements later. Scope of service and performance standards should be included in the contract.
- Supervise and Monitor Vendors Continuously
Automated monitoring and supervision need to include the vendor’s financial condition. The vendor’s policies relating to internal controls and security should be reviewed and some method of determining whether the vendor is following such controls should be developed. It is also necessary for the vendor’s contingency plans to be reviewed.
Vendor management is complex and at times can be cumbersome too. When properly implemented, it can help the organization save money, reputation,and deal well with regulatory issues. To ensure successful Vendor Compliance Management and to improve collaboration with vendors, it makes good sense to invest in a sound Vendor Management solutions that enables you to effectively leverage and manage vendor management process.
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