A Best Practice Guide to Vendor Management Workflows

Procurement’s relentless focus on sourcing - above critical tasks in vendor management - is holding it back. I’ve seen this all too often.

There is too much focus on activities to find the right vendor for your requirements but not enough focus to ensure that the vendor is fit enough to work with you.

Not to mention that procurement teams often neglect vital activities needed to manage the vendor lifecycle after the contract has been signed.

I’ve seen this in several organisations, and there is commonality around why:

1. Organisations have manual processes for vendor management, requiring lots of energy to operate, so other essential activities take priority.
2. They don’t have processes that capture the entire vendor lifecycle.
3. The business lacked a dedicated procurement/vendor management team.

In this article, I’m going to cover:

What vendor management workflows are
How automation resolves common vendor management process challenges
How to identify inefficiencies within your workflows 
10 best practice vendor management workflows 

I’ve spent the best part of seven years creating better vendor and contract processes for a range of organisations in the public and private sectors.

Whilst each organisation has its uniqueness, the lessons learned are universally applicable.

What are vendor management workflows?

Vendor management workflows refer to the processes and procedures for managing vendors or suppliers systematically and efficiently.

These workflows encompass various components, including:

1. Vendor selection: This involves identifying and evaluating potential vendors based on specific criteria such as price, quality, reliability, and capabilities.

2. Vendor onboarding: Once a vendor is selected, onboarding begins. This includes setting up the necessary contracts, agreements, and documentation, establishing communication channels and providing necessary training.

3. Contract management: Vendor management workflows also involve managing vendor contracts. This includes negotiating terms, monitoring compliance, and ensuring that both parties fulfil their obligations.

4. Performance monitoring: It is crucial to continuously monitor the performance of vendors to ensure they meet the agreed-upon standards. This may involve tracking key performance indicators (KPIs), working with Service Level Agreements (SLAs), conducting regular performance reviews, and addressing any issues or discrepancies.

5. Relationship management: Building and maintaining strong vendor relationships is essential for successful vendor management. This includes fostering open communication, addressing concerns or disputes promptly, and seeking opportunities for collaboration and improvement.

How Automation Resolves Common Vendor Management Process Challenges

Vendor management workflows fall under our 'Take Control' pillar within the Gatekeeper Three Pillars. The Three Pillars are a systemised way to approach Vendor and Contract Lifecycle Management (VCLM).

When it comes to 'Take Control', vendor management workflows are a vital part.

We look at these through a digital lens, though, as a manual method will never work as you scale. You simply cannot do it the manual way. Instead, you need to figure out how to automate as many repetitive tasks as possible."

Police Bank came to market with some key requirements in this space. They wanted to:

• Reduce supplier onboarding time via automation.
• Help achieve and maintain flawless compliance with strict outsourcing and regulatory requirements.
• Replace manual processes associated with tracking vendor and contract data.
  
  

And this is where workflows come into play.

Using Gatekeeper’s Kanban Workflow Engine, the business was able to automate vendor onboarding. At the same time, contract generation has also been streamlined through the use of Gatekeeper’s clause library and templates.

We showed you how to do this in our Contract Review Webinar. Watch it below. 

Automation simply means replacing the steps that previously required a human with that of software. Within the Gatekeeper VCLM platform, this could be automation such as:

• Creating a vendor record
• Creating a contract record
• Capturing the vendor’s financial and cyber health
• Notifying the correct stakeholders
• Pulling in stakeholders to a review and approval phase
• Renewing due diligence
• Renewing vendor documentation such as vendor certificates
• Performance reviews

There are countless opportunities to bring automation to your vendor management workflows that reduces the time spent on a task by your team. But, perhaps more important than that, automation enforces process compliance, meaning your organisation has a consistent way of managing its vendors.

How to Identify Inefficiencies in Your Vendor Lifecycle Management

Identifying inefficiencies is simple if you go about it in the right way. The right way isn’t to talk about this internally within procurement.

You need to venture out into the world. I recently spoke with Reba Cox, an incredibly accomplished Procurement Leader, who heads up Procurement at MongoDB.

Reba made this point:

“So we definitely haven't done it perfectly. We're constantly iterating. In fact, we just recently did a voice of customer interview with our heaviest users just to make sure that we didn't have any more improvements to make, which we do, spoiler alert” - Reba Cox (Podcast Episode coming soon).

The context here was a small part of their vendor onboarding process. But listen to the approach.

They carried out a voice of the customer review which is something utilised by SaaS companies who want to understand the needs, requirements, and frustrations their customers have so they can build out a better product offering.

Taking the best from other professions and business models and applying them to procurement makes sense.

So talking with your colleagues across the business, not just procurement, in a structured manner makes sense.

I’d recommend doing this in person and recording the call so you can pull a transcript from it or doing it via a video call to get the transcript. We’re fallible as humans, and our focus should be on the conversation, not note-taking.

Do this, compare and contrast the different thoughts across the business and then make improvements to help them.

10 Vendor Management Workflows Optimised for Efficiency

At Gatekeeper, we’ve built a library of Best Practice Workflows to power every vendor and contract management process you have.

We’ve taken our internal expertise around vendor management, mixed it with the pain points we’ve solved over many years for our customers, and created a suite of workflows that largely work out of the box with some basic configuration.

Why?

To give you a head start. This head start means you can leave the workflows as they are or you can customise them to suit your own needs with no code needed.

We’ve got the following Best Practice Workflows:

• Vendor onboarding
• Vendor contract review
• Vendor contract amendment
• Vendor contract renewal
• Vendor file expiry & review
• Vendor ESG due diligence
• Vendor credit/cyber escalation
• Vendor performance tracking
• Automated NDA workflow
• Vendor update information workflow

Each of these will enable you to have a comprehensive vendor & contract lifecycle management process in place that delivers huge ROI for your business.

ROI could be in the form of decreased risks, approved vendors only, never missing a renewal, and having the ability to use vendor and contract data to drive savings opportunities.

We covered our workflows in-depth during this webinar that you should check out.

Conclusion

Vendor management workflows should be used to power every interaction with your vendors.

Not only do they create a uniform way for you to approach vendor management, they ensure you’re compliantly managing your vendors.

To top that off, vendor management workflows enable you to collect data that fuels your other vendor and contract management activities, whilst ensuring you actively collaborate with your vendors.

If you want a quick win, deploy the Best Practice Workflows, or build your own.

Make sure you have a digital workflow.

Ensure it works with your colleagues. Deploy and iterate.

And never stop doing that. 

Find out more information about our Workflow Engine and how it can improve your vendor processes. Or, if you're ready to get into action, speak to one of our experts.