The global economy is experiencing a level of volatility and uncertainty not seen since the 2007/08 financial meltdown. Inflation, geopolitical instability, tighter monetary policy, and the global supply chain crisis are impacting industries ranging from retail to construction to aerospace. On June 15, 2022, the Federal Reserve in the United States raised interest rates by three-quarters of a percentage point, the steepest hike since 1994. Additional hikes are likely to follow, strongly suggesting that curbing inflation is now a top central bank priority. The growing possibility of a recession is further roiling markets and portfolios.
In this economic climate, choosing the best vendors is crucial to maximizing return on investment. Vendor management platforms aggregate pre-vetted communities of trusted vendors and suppliers and allow procurement officers to make data-driven decisions that enhance the bottom line. VMPs are crucial intermediaries between buyers and sellers that allow investors to focus on breakthrough ideas and companies to focus on delivering quality products and services.
Effective vendor management is never a “one and done” process. The best VMPs move beyond the nuts and bolts of contract negotiation and service delivery to enable ongoing vendor relationship management and partnerships. Just as customer relationship management revolutionized marketing in the 1980s and 1990s, vendor relationship management (VRM) is proving essential not only to short-term procurement decisions but to long-term risk management and reputational value.
High-quality vendors enable successful companies. From payment processing to data analytics to customer service, there are multiple behind-the-scenes functions that are essential to get right. In a worst-case scenario, poor vendor choices can derail a company’s forward momentum and even expose it to corporate liability or reputational damage.
Vendor relationship management requires attention to both the buy-side and the sell-side of the equation. On the buy-side, companies need to be strategic about finding the best provider for their needs, which may not always be the largest or best-known provider, nor the most expensive one. On the sell-side, vendors need to ensure that customers are provided with relevant goods and services. Given the complexity of vendor management, as well as the number of providers in the market, trying to do vendor management on the fly will churn through cash and become a time-wasting headache.
Vendor relationship management requires sustained attention to people, data, processes, and innovation. What worked in the early phase of the company’s growth might not work as the company matures. Rather than reinventing the wheel, and going in search of new vendors each time the strategic environment shifts, VRM platforms bring needed and timely data in-house to enable better decision-making. Making vendor management a core function of the business is likely to improve outcomes over the long-haul. As the Forbes Technology Council argues, “if an organization doesn’t manage their vendors or suppliers in the same way they manage their customers, there will be empty shelves or delays in delivering finished goods/services. To put it simply: Without a VRM, your organization’s future is unsustainable.
The widespread availability of social media today ensures that customer complaints or issues that might once have been handled discreetly can rapidly ramp up to become highly visible and toxic. The loudest and most critical voices on the left and the right of the political divide have been amplified by social media and there is even a murky professional trolling industry that employs people to scour the news for click-bait controversies.
At the other end of the scale, consumers, shareholders, and governments are paying more attention to company performance across a range of criteria that includes social and environmental impacts. For example, the Infrastructure and Investment Jobs Act, a $1.2 trillion USD initiative championed by President Biden and passed by a bipartisan majority in the US Congress, mandates that those receiving investment funds demonstrate a commitment to diversity, equity, and inclusion (DEI) in procurement decisions. United States Department of Defense regulations also require quantitative evidence that acquisitions officers have sought out small disadvantaged businesses as potential suppliers and ensured a transparent decision process.
The health sector provides another good example of the benefits of moving from one-off vendor decisions to ongoing vendor relationship management. The covid-19 pandemic caused supply chain disruptions that affected everyone from front-line healthcare workers to first responders and surgeons. The pandemic also highlighted the complexity of a sector that depends upon vendors for everything from high-end surgical equipment and vaccines to waste management and cleaning services. Symplr, a provider of healthcare services and solutions, emphasizes that “when implemented correctly, vendor relationship management puts the organization and the vendor on the same side and gets both parties working together to reach common goals so that when one succeeds, the other does too.”
These brief examples demonstrate that vendor relationship management is increasingly a form of risk and reputation management. VRM can also mean the difference between success and failure in navigating unexpected disruptions and global volatility. Efficiency and return on investment still matter, but a company that does not exercise due diligence of the vendors it contracts with risks guilt-by-association should that vendor end up in the social media spotlight. Procurement officers—particularly those who are involved with government funding and/or customers—will also need to make affirmative efforts to ensure that all potential suppliers, including women-owned and minority-owned businesses—have been given real opportunities to bid. Finally, it is important to see vendors as partners in the overall enterprise, and a good VRM platform enables this. Per Entrepreneur magazine, “the more you know about your suppliers, the better you can evaluate whether you should continue to do business with them. If they shut you out, perhaps you should cut them off.”
Choosing a top-quality vendor relationship management platform such as Proven can mean the difference between the success and failure. Proven, with its one-of-a-kind community platform, supports your companies to scale quickly and effectively by connecting buyers, suppliers, and intermediaries in a structured way and providing the metrics to ensure performance and oversight.
Proven is the vendor management platform of choice for five of the top ten largest global venture capital firms, including Norwest and NfX. Our clients include 70 percent of the top-tier VC firms in Silicon Valley. We have thought hard about what makes a good vendor relationship and developed the tools needed for effective vendor management.
Proven streamlines the process of finding and vetting vendors. As entrepreneurs ourselves, we know how difficult it can be to navigate an overwhelming number of providers, services, and offers. By creating a community of trusted vendors, our platform offers you immediate access to a pool of talent and lets you compare offers and make the best choice for your portfolio businesses. We facilitate these connections and, with the needs of operations managers in mind, track performance metrics to maximize vendor spend. Our easy-to-manage portal brings the best vendors to you and lets you compare options across service categories.
Proven also facilitates the supply-side of the vendor management relationship. Our invite-only platform lets vendors display their achievements and create a client portfolio that will reach companies and investors. Vendors on our platform do not need to create a new portfolio or campaign for each potential client but can leverage the power of data and reputation to connect with new opportunities.
GetProven for vendor relationship management and success.(www.getproven.com)