How to apply a procurement strategy with vendor management software - PowerPoint PPT Presentation

About This Presentation

How to apply a procurement strategy with vendor management software


Vendor management software : Well-conceived procurement strategies are key to creating a reliable, cost-effective and resilient vendor base for your business’s most important areas of spend. There are different choices to be made when it comes to the approach with supplier optimisation, risk mitigation and cost reduction often being the main priorities. – PowerPoint PPT presentation

Number of Views:153


Transcript and Presenter's Notes

Title: How to apply a procurement strategy with vendor management software

How to apply a procurement strategy with vendor
management software
  • by eplatformtech 

  • Vendor management software  Well-conceived
    procurement strategies are key to creating a
    reliable, cost-effective and resilient vendor
    base for your businesss most important areas of
    spend. There are different choices to be made
    when it comes to the approach with supplier
    optimisation, risk mitigation and cost reduction
    often being the main priorities.
  • Creating a procurement strategy isnt just a
    one-off task. It requires dedication and
    meticulous planning from the outset and evolves
    as the vendor base matures and the business
  • A universal procurement strategy will require
    multiple iterations as you look to stay ahead of
    your competitors and to get the best value at all
  • In this article, we take a look at how you can
    create and apply a coherent procurement strategy
    and how vendor management software can support
    your approach.

What Is A Procurement Strategy?
  • Put simply, procurement is the action of
    obtaining or procuring something. For your
    business, procurement means obtaining services or
    goods that are relevant to its overarching
    objectives, internal requirements or customer
    needs. A procurement strategy needs to be aligned
    with the businesss overall objectives.
  • A procurement strategy is an organisation-wide
    effort and requires collaboration between the
    leading Procurement Team and other departments
    such as Legal and Finance.
  • The purpose of the strategy whether its to
    streamline the supplier base, minimise levels of
    risk or save costs should be agreed and
    understood between teams at the outset for a
    robust and coordinated approach.

What Should Your Procurement Strategy Include?
  • Regardless of the ultimate goal behind the
    procurement strategy, there are a number of
    common factors every process should have whether
    youre starting from scratch or looking to
    optimise your current process. These include
  • The overarching business objectives that need to
    be achieved
  • Deliverables (goods or services) that are needed
    to achieve these goals
  • An understanding of current organisational spend
  • Awareness of current operating conditions, trends
    and expected outlook
  • The means to conduct market research
  • A reliable RFP process
  • A defined set of KPIs to measure various aspects
    of vendor performance
  • Risk mitigation plans
  • Regular reviews of the strategys effectiveness

  • Data collection and market analysis will be key
    to informed decision making across the supply
    chain and will require input from a variety of
    teams and stakeholders. Resources will be needed
    to complete market research, make comparisons
    between different vendors and collect vendor
    information for any evaluation to take place.
  • Once vendors have been selected as part of the
    procurement process, cost and KPIs need to be
    negotiated and agreed.
  • There are a number of things your business needs
    to do once services have been procured and vendor
    management software can support your business
    through each stage.
  • Lets take a look at how.

1. Create A Central Record Of Vendors And
  • The ability to apply a successful procurement
    strategy across your business relies on a deep
    understanding of current relationships, current
    spend and any gaps in services or goods. By
    creating a central record of vendors and
    contracts you can minimise the potential for
    business risk and delinquent spend.
  • Vendor management software offers a central
    repository that makes it easy to access all the
    information you need from a single location,
    increasing your visibility of the contract
    portfolio and each of your vendors.
  • With this centralised view, you can more easily
    spot any potential issues such as unplanned
    duplicate spend or insurance certifications that
    are coming up for expiry and act quickly.
  • A complete understanding of your vendors, their
    risk status and upcoming key dates will underpin
    stronger relationships and a more sophisticated
    strategy for maximising value across the supply

2. Optimize Collaboration With Third-Parties
  • The way you onboard, communicate with and manage
    your vendors will have a defining impact on the
    quality of the relationship moving forward.
    Dedicated software that includes a Vendor Portal
    creates greater efficiencies for your business
    and a streamlined experience for your vendors by
  • Automating vendor onboarding and compliance
  • Accurately building vendor profiles through data
  • Capturing all relevant information in a desired
  • Notifying vendors when they need to update
  • Creating a fully defensible audit trail of all
    communication with vendors
  • Digitising your procurement processes at every
    stage from RFPs to renewals.
  • Using vendor management software to automate and
    optimise your collaboration with third parties
    will reduce manual errors, save your internal
    teams valuable time and allow your business to
    make informed decisions with your vendors based
    on accurate information.

3. Minimise And Mitigate Risk
  • If your approach to vendors is fragmented, you
    are exposing your business to numerous risks
    including financial, regulatory and reputational.
    Fragmentation can ultimately lead to chaos within
    your business and within your vendor
    relationships, causing different scenarios such
  • Missing documentation that leads to
  • Lack of awareness around poor vendor performance
  • Unfulfilled contract obligations going unnoticed
  • Poorly timed escalations that can lead to
    operational failure
  • A lack of audited history evidence to help
    resolve disputes
  • Poor user and vendor satisfaction
  • Ineffective business continuity planning.

  • An effective procurement strategy means taking
    control of data, centralising your information
    and standardising your processes. Vendor
    lifecycle management software can eliminate the
    chaos by helping you to visualise and automate
    even the most complex processes through a
    dedicated workflow engine.
  • This level of automation gives you greater
    control at every stage, enhancing the risk
    mitigation efforts within your procurement
    strategy through escalation workflows that
    trigger exactly when you need them to.
  • One way to trigger escalation workflows to help
    you mitigate risk is to assign a Risk Score to
    each supplier. Calculated from the probability of
    events happening and the impact it will have
    across your business, a high risk score can be
    used to automatically trigger escalation and help
    you to put your mitigation plans into action.

4. Measure Performance
  • Successful procurement strategies are ones that
    keep monitoring and measuring the success of the
    vendors involved. Before onboarding vendors, a
    set of KPIs should be defined that they can be
    continuously measured against.
  • A performance review should occur at a frequency
    commensurate with the vendors importance such as
    once a quarter up to once a year, but how do you
    plan for the time, the workload and the resource?
  • Vendor management software can be used to
    streamline this review process as well as provide
    an accurate up-to-date snapshot of how your
    vendor is performing through Balanced Scorecards,
    data-driven dashboards and automated performance
  • Not only can you measure, collect and analyse
    data about your vendors performance, but you can
    also share this information with them. This in
    turn helps drive corrective actions to improve
    areas of weakness.
  • By using vendor management software to support
    your procurement strategy, not only will you
    drive better performance across your supply chain
    but you will also be able to hold your vendors to
    account, extract maximum value and increase ROI
    across your business.

5. Assess Vendor Spend
  • Hidden and indirect spend are two areas that
    commonly weaken a procurement strategy and drive
    costs up across a business.
  • Its crucial to understand the spend culture
    across your organisation and adjust vendor spend
    accordingly. Spend analysis can help you to drill
    down into business-critical issues such as
  • What forecast vs actual spend is
  • How direct spend vs indirect spend is impacting
    your business
  • If there are multiple vendors supplying the same
    goods or services
  • Cost differences between multiple vendors
  • The true cost of third-party expenditure
  • Vendor management software will give you a
    centralised view of this essential information
    and help you to automate your processes around
    spend capture.

6. Manage Renewals And Negotiate Effectively
  • Spend analysis and negotiation go hand-in-hand
    and can help you to streamline your supplier
    base. By analyzing your spend, you can use the
    information gathered such as the ongoing value
    of the contract to strengthen your negotiating
    position to achieve better terms ahead of
  • Spend analysis can also be a key factor in
    deciding whether you do decide to renew or if
    close-out is simply the more cost-effective
    option for your business.
  • There are some key steps you need to build into
    your procurement strategy so that you can
    effectively manage your renewals and reach a
    powerful negotiating position
  • Record key dates centrally
  • Build in time for a contract review
  • Have a clear strategy for engaging your supplier
  • Determine if expected benefits and
    value-for-money have been achieved.
  • A successful procurement strategy will open up
    opportunities to realize greater value and
    results for existing vendors within the portfolio
    and to identify cost-effective alternatives
    available on the market.

  • Procurement should focus on obtaining the desired
    quality and value goods and services at all times
    not just at the start of a relationship.
  • Use vendor management software to optimise this
    process with automated alerts ahead of key dates
    so you can understand the current value being
    delivered by third parties and make renewal
    decisions ahead of time. Pre-emptive action will
    mean you never miss another renewal opportunity
  • You can learn more about building renewal
    processes into your procurement strategy by
    watching the webinar below

  • Procurement strategies should be applied after
    careful consideration and with business structure
    and goals in mind. Acknowledging that procurement
    is an ongoing process rather than an activity
    that ends at the point of contract initiation
    will help you to better align different
    departments across the business and improve
    collaboration with third parties. Investing in
    a vendor management platform can support your
  • Eplatform Tech helps businesses to identify
    cost-saving and performance improvement
    opportunities, and helps them to better manage
    their renewals and negotiations. This means
    business can minimise risk, maximise value and
    yield the benefits of deep, collaborative
    relationships across the supply chain.
  • If you want to know more about how vendor
    management software can support your procurement
    strategy, book your Eplatform Tech demo today.

  • CALL NOW 9910118726
  • VISIT TO OUR WEBSITE https//www.eplatformtech.c

Thanks To Be With Us
Write a Comment
User Comments (0)