Supplier management software is a necessity for any organization that has a risk-based approach for handling the vendors and other third parties. These applications centralize information, automate workflows, and deliver action-oriented reports that are used to manage risk, increase performance, and ensure vendor compliance.
However, when it comes to choosing vendor management software, there is no one-size-fits-all solution. In fact, it is often overwhelming.
If you are in the market for vendor management software, this blog is for you. We will look at the benefits of using vendor management software, different solutions on the market, and the key features that will suit your business.
What is Vendor Management Software?
Companies work with many suppliers throughout the supply chain and logistics. When it comes to managing these vendors and other third parties (and the risks these companies pose to your business), paper forms, Excel, and custom / do-it-yourself databases are not enough. You really need a software solution customized as per your organization needs to make the vendor management program a success.
Vendor management software is sort of a CRM for your vendors. It is a central hub and source of truthful information for supplier information, streamlines communication and collaboration, and facilitates monitoring and management of supplier performance, compliance and risks.
Types of Vendor Management Software
Many products present themselves as supplier management software, but most of them offer the basic features at best. You want a software package specifically designed to manage your vendors, rather than a “workflow management” system that requires hours of customization.
At Sciqus, we’ve researched that the any vendor portal come into one of the four categories. Deciding which one best suits your needs is a critical step in ultimately choosing the right solution
1)All-in-One Vendor Management Systems
If you want to manage the entire lifecycle of your vendor relationship, this is usually the type of solution you want. This portal is designed to manage end-to-end relationship. The supplier file is the “center” of the system, with all the functions, such as procurement, contract management, risk assessment and due diligence, linked to most of the supplier files. This system will provide you with all the basic features that are required throughout the vendor lifecycle.
2)Third-Party Risk Management Systems
If risk management is your primary focus, consider an answer that addresses third-party risk first. These applications were developed primarily to support all types of risk analysis, risk monitoring and resolution. These systems provide complicated process flows and automation for risk management, including automated replies and risk analysis. Integration with third-party data intelligence solutions will give an overall view of your vendors, for fruitful risk monitoring.
3)Contract Management Systems
If managing contract workflow is your main goal, a contract management system might be the best solution. These systems act as the “hub” for developing, negotiating, signing and managing the contract document is its strength. Contract management and contract compliance are the strengths of these systems, although they often have limited capacity to support the RFQ and risk management workflow.
Procurement software developers have greatly improved their vendor management as many now have add-on modules for vendor, contract, and risk management. The core of these systems is the procurement flow and payment processes. While the add-on modules provide some key functionality, they are generally not as powerful as the contract management or risk management systems.
Top Features to think about during a Vendor Management System
Nowadays best supplier management software offer a wide variety features and functionality. But don’t specialize in the bells and whistles. Instead, look for excellence within the core functionality that you will use every day.
While certain types of systems may provide functionality that others do not (for example, signing during a contract management system), there are some features that you would like to have no matter the type of system you select.
1. Vendor Master Data Management
Would you like to create and manage a central repository for your provider’s metadata and related documents such as contracts, SOC reports, annual financial statements, and insurance certificates? Then this is a mandate feature for you.
2. Vendor Collaboration
It should be easy for your suppliers to provide you with information and documentation in a secure manner. Good software solutions offer secure portals that you and your vendors can use to answer questions, exchange documents, and work together before and after signing a contract.
3. Employee Engagement
If your internal employees need to request a new supplier or a change to the scope of an existing supplier, the third-party risk management system should be the place where the requests are made. Like the vendor portal mentioned above, your employees must have access to a dedicated employee portal that allows them to submit requests and activate acceptable workflows.
4. Automation of Risk-Based Classification
There should be a workflow-based process to evaluate new suppliers (or existing suppliers if scope changes) and an evaluation logic to calculate an inherent level of risk so that you can determine the level of risk-based due diligence you must do with your suppliers.
5.Automation of Question Response and Residual Risk Scoring
A time-saving and automated risk assessment means that the system does all the work to provide an initial response, and an assessment, of responses to the supplier due diligence questionnaire. This is normally done by creating risk standards within the system and aligning them with the answers to individual questions so that the system can go through a first step. This will get you out of the weeds and allow you to specialize in hazards and how best to eliminate them.
6. Tracking of Residual Risks and Overall Risk Register
If risks persist at a provider, you want to track, remediate, and monitor them. Find the system’s ability to automate vendor-level residual risk tracking and corrective actions, and share them in a general risk register so you can see a snapshot of all your vendors across the business at all times.
7. Risk and Performance Management
Your system must be able to track risks and performance requirements with your vendors, and you must manage these requirements for longterm connection.
The system should facilitate reporting on supplier management activities and allow easy collection of knowledge to be used when reporting to senior management, committees or the board of directors. You should also leave unplanned reports in case employees receive information tailored to their needs (for example, an inventory of active vendors in your department). There should even be role-based dashboards that make it easy for each user to identify only the most important relevant information.
After all, your solution must integrate well with existing companion business applications. It must also be integrated with third-party threat and risk intelligence that provides data on cyber threats, business health, sanctions, and similar information.