Vendor management is one of is the most complex and sophisticated methods in the whole procurement process. It can seem simple when the number of vendors is small, but the complexity rockets “straight up” as the number of purchases gets higher.Staff, managers, employees, and internal resources responsible for managing this vital part of an organization are under constant pressure to manage the complexity of both individual decisions and company process requirements. Because of these complexities, organizations are finding it more and more difficult for staff and management to follow vendor management procedures.
The expansion of digital business, growth of cloud services and increasing regulatory scrutiny of third-party vendor relationships are just a few factors placing a heightened focus on vendor risk management.
But not every vendor relationship is created equal. A true, risk-based approach requires organizations to first segment their vendors based on pre-determined criteria, and then establish an appropriate level of ongoing due diligence and oversight activities based on the assigned level of risk. And while the specific activities may vary across organizations, there are three types of risk you want to be sure to address.
It happens all of the time. Clients that audit their own billing and manage their own contracts spend wasted hours trying to sort out the fees and promo plans service providers offer. In the end (months later) they realize how much time and energy they spent trying to sort out the very complicated terms, renewals and plans that should have been crystal clear from the beginning. No customer should have to feel they are “in charge” or have to be “on the watch” for changes in their contracts and agreements especially those “1 year promos”. Shouldn’t the service provider INFORM their customer more clearly of any changes going into effect, clearly state them and offer cost saving OPTIONS? Well that is NEVER going to happen!
Your company starts to grow, and you need more technology to keep up with additional staff, customers and to help improve process. You are aware of the efficiencies and cost savings made possible by new technologies and are upgrading their infrastructures as a result.
But are you aware of How Purchasing more Technology can lead to Cost Creep?