What is Strategic Vendor Management?
Strategic Vendor Management (SVM) is an ongoing process that provides centralized visibility into procurement spending, which allows for better-informed business decisions. Sure, that’s a mouthful, but saving money and doing better business is no joke. Even in a perfect economy, companies need to look for ways to build greater partners that add value. Strategic vendor management is a consistent way to:
- Lower costs
- Increase insight
- Improve the relationship with vendors
- Mitigate risk
In this competitive and complex global economy, companies need to spend and manage their internal resources efficiently. So, why not strategically streamline vendors so you can negotiate more value from your existing ones? Does this sound impossible? It isn’t. With some careful strategic vendor management, you can get more value and build your command and control center with your existing vendors.
How Can Strategic Vendor Management Benefit my Organization?
There are many essential benefits of strategic vendor management, including:
- Cost savings: good relationships and shared insight lead to better pricing and collaborative strategies. One of the goals of a vendor management system is to get the most value for your investment. Implementing a vendor management system can result in long-term costs savings and improved earnings over time.
- IT governance: managing multiple vendors at the same time can be difficult. Some vendors may prove to be a great investment, others may not. In addition, having a multitude of vendors can increase the risk of security breach. Tracking all vendor-related information in one place provides easier compliance, more robust risk management, and simplified decision-making process.
- Innovation: proactively engaging with strategic vendors ensures maximum efficiency and increases focus on core business functions. In other words, you can rely on the vendors that provide value. Simple, right? No, really. It is. Read on!
How Do I Know if I Need Strategic Vendor Management?
Before making your next move, take inventory of your current process. Here’s a list of indicators that signal you need help:
- No centralized information and reporting from vendors
- Little or no risk management processes in place
- No contract management or curated vendor relationships
- Simply too many vendors
If this sounds like your company, don’t despair! You can help turn it around.
Set the foundation for strategic vendor management by establishing key personnel to handle the process, to set best practices, and to strive for continual improvement. If you’ve already checked off each of these processes, then good job! But don’t stop. There’s always room for optimization.
What Does the Strategic Vendor Management Process Involve?
As you develop your internal strategies, you’ll find components that work best for your organization. To begin with, review the following corporate activities. You’ll want to make sure you hit them all.
Step 1: Streamline in the Cloud with LoadSpring for Better Vendor Value
For products and services, look out for any overlap or redundancies and develop relationships with impactful vendors first. For example, if you’re using 4 different cloud services, you’re likely going to have a series of problems, including:
- Difficulty tracking software licenses
- Internal IT overburdened with support cases
- Difficulty integrating KPI development analytics opportunities
- Complicated billing and spending
Consolidating to one vendor that fulfills all of your ordering needs will almost certainly be worth it. Consider finding a cloud solutions provider that can host everything in one place.
For critical technology that may be complex or evolving, such as project management software for those massive projects, the best option is in the cloud.
Constant change can be disruptive, and even beneficial with updates, but it can also be under your control with:
- LoadSpring performance reviews: get the most out of your cloud experience – automatically.
- Zero trust security: no one gets in that doesn’t belong. Ever.
- Global secure access with by-user usage reporting: users can log in wherever and whenever they need, quickly and securely.
- Centralized 24/7 global support: minimize downtime and maximize efficiencies.
- Rapid deployment to meet your business needs: we’ll get you up and running in record time.
- Automated license reporting: ensure the people that need software get it, and those that don’t need it don’t get it. Maximize your investment with easy reallocation.just to name a few.
Our experts can guide you through the toughest challenges. Have a look! If you don’t see the software you want, just ask. Our business analysts can find what you need and help drive your ROI.
Step 2: Spend Analysis
Open those books and see what’s doing. Analyze every purchase and every vendor over a sizeable chunk of time. In other words, aim for near-perfect accuracy in measuring spend. Plan to analyze relationships often as markets are in constant flux. Work with your finance people to ensure a cadence is kept that keeps everyone happy, without creating more work than necessary. And automate analysis whenever possible.
Step 3: Tracking Vendor KPIs
Define KPIs relevant to the relationship you have with your vendor. Identify the measurable, essential merits they provide to your organization. Some examples are:
- Reasonable pricing,
- The ability to fulfill contractual obligations in a timely way,
- The efficiency of the shopping experience (can you order many different things at a fair price from one vendor), and
- The quality of customer support; and any other relevant factors.
Make sure the KPIs are reasonable, attainable, and as transparent as possible to the vendors. Base KPIs on standard levels of expected performance. Continually review these KPIs internally and with your vendors, and reassess regularly.
Strategic vendor management is a relationship that continues to grow and mature alongside your company’s growth. Continue reviewing your spending, tracking vendor KPIs, and always looking to foresee what your company needs next. Following these best practices is how leaders become champions.
If you’re in a big-project organization, your project application rationalization process will probably already have uncovered specific goals needed to improve business operations. We’ve felt your pain, and we’ve created a quick, one-stop-shop to help. Coming soon: LoadSpring MarketPlace! LoadSpring MarketPlace is a powerful new way to procure cloud-hosted project management apps directly from the web to your users. Stay tuned. You can be the first to take advantage!
Ready to get started? We are ready to assist you in streamlining the procurement and hosting of your all-important project software. Wherever you in the process, our sleeves are rolled up to get you to the next level. Call us today for a little extra help! US +1 978.685.9715 or UK +44 800 088 5889.