How vendor management can benefit your company and bottom line

How vendor management can benefit your company and bottom line

Any business that procures components or resources from third-party vendors as part of their operating process must also deal with the complexity of managing relationships and agreements with these vendors. When procurement from vendors is a large enough part of your business or occurs at high enough frequency, the number of vendors, terms, and agreements can lead to an exponential increase in this complexity. In these situations, it’s often worthwhile to invest in vendor management services (VMS).

Vendor management services refer to outsourcing IT vendor relationships to a specialized managed IT services provider. Doing so not only takes the stress off your business, but also boosts your bottom line stemming from cost savings and improved performance.

What can VMS do for you?

Selecting vendors

A VMS provider can expedite and streamline the vendor sourcing process. They assess your current lineup of vendors on the basis of their performance, quality, and pricing structures. VMS providers also use their deep knowledge of the market to identify vendors whose terms and price levels are appropriate for your business’s situation.

Additionally, VMS consultants can find opportunities to consolidate vendors, sourcing the required products from a smaller overall pool of vendors. This not only reduces the complexity of the setup, but also results in more favorable terms.

Negotiate on your behalf

VMS consultants will not only find the suitable vendors, but also negotiate better contract agreements for you, such as lower per-unit prices and better customer support from vendors.
This leads to reduced costs and improved performance in terms of promptness and reliability of delivery, and the quality of the goods.

When switching between vendors, a VMS consultancy will also manage the transition between the two, mitigating the risk of a break in supplies and subsequent loss of income.

Information and risk management

Part of the service suite is monitoring vendor activities and reporting relevant information to your business. VMS providers keep you abreast of information regarding cost, inventory, and lapses between demand and delivery, enabling you to take stock of your situation at any time and respond accordingly.

They will ensure vendors’ compliance with their contracts and service level agreements with regards to pricing, delivery times, and invoicing procedures. They can also assess and monitor levels of risk involved, which is particularly important when dealing with vendors who manage sensitive data.

How do you benefit from VMS?

Enhanced profitability

Employing VMS will improve your bottom line through reduced purchasing costs, and a more efficient procurement process that elicits less overhead costs. The improvements in productivity that result from this streamlined process will likewise translate into financial gains for your business.

Improved relations

By managing the flow of information between your business and your vendors, the needs and qualms of each party can be aired effectively and addressed. Regular reviews will provide a clear view of vendor performance, allowing any issues to be identified ahead of time and raised in the appropriate manner. This will result in fewer misunderstandings in the long term.

Opportunity benefits

Employing a VMS frees your experienced team members from the work of troubleshooting issues that arise within the procurement and vendor management space. This enables them to focus on core procurement processes and proactive management.

If you want to fully experience the benefits of VMS, we at outsourceIT can serve as your advisors for all things vendor-related. Contact outsourceIT now to get our expertise on your vendor management problems.

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