Each year, governments, non-profits, and corporations spend trillions of dollars to procure the supplies they need for their daily operations. It’s difficult to track the whole process and identify areas for improvement in the vendor or supplier relationship, which means that a large portion of procurement spend is lost.
A vendor management system is a way to change that. It serves as a source for truth in managing end-to-end procurement relationship with a company and its suppliers and/or vendors.
What is a Vendor Management system?
A vendor management system is software platforms that help businesses establish relationships with suppliers, purchase supplies, process payments and facilitate supplier or vendor communication. They also allow for seamless management of the entire vendor process and relationships through a single application.
SaaS vendor management software manages and modernizes four key company-to-vendor issues:
- Communication and relationship management between suppliers and vendors
- Project coordination and management for suppliers and vendors
- Payroll management and contracting with suppliers and vendors
- Compliance management for suppliers and vendors
Also read: What is Vendor Risk Management? A Full Guide for Your Business
Features of a Vendor Management System
These are the essential features that a vendor management platform must have in order to support your procurement needs.
1. Centralized dashboard for all things related to suppliers and vendors
Vendor management systems provide a single source for truth that can be used to manage suppliers and make data-driven decisions. This includes:
- Tracking previous and current purchases
- Assessing vendor risk profiles
- Analyzing supplier metrics
- Collecting tax and payment data
- Processing einvoices
- Compliance Management
Finance teams can see what is working and what needs to change. A central dashboard allows them to view the status of their procurement strategy.
2. Vendor acquisition, evaluation and onboarding
It is more complicated than simply looking at potential suppliers and sending them a list with the products and services that you require. Before you can choose any vendor, you will often have to go through a lengthy process to gather quotes and get proposals.
Businesses must still onboard suppliers after vendor acquisition to allow them to work with them through their internal procurement and communication processes. Vendor management systems organize all purchasing processes and workflows vendors must follow to be able to get up to speed quicker.
3. Vendor communication and collaboration
Suppliers may not deliver what they promised, order delays may occur, or disputes could arise. A vendor management platform allows customers to communicate what they want for each order, how long the supplier will supply them, and the terms for which they will be supplied.
4. Contract management
All businesses can create, review and sign contracts within a vendor management software. Vendor agreements outline how the parties will work together and the terms of the agreement. If your vendors fail to comply, severance terms will also be in effect.
It is easy to set up vendor management systems that allow you to create and modify contracts using a template or from scratch. You can also engage stakeholders in the process of drafting them. And, with workflows, you can manage large scale contracts.
It is important to make sure that you have the right tools for your contract management software when searching for a vendor management solution.
5. Supplier support
A procurement platform is a quick support channel that can take note of and fix issues raised by vendors to help them work through them before they escalate.
6. Data integrations and archives
Your vendor management platform is a repository of historical data that tracks every transaction, issue, and decision made on supplier issues. Vendor management platforms can also be integrated with third-party financial and operations tools such as Xero and Slack.
7 Best Vendor Management Systems in 2023
These are the top seven vendor management software vendors you should research in 2023.
Airbase is a spend management platform that as doubles vendor management solution. This product integrates expense reimbursements, accounts payables, and expense cards to create a finance platform that can be used by teams of any size to manage non-payroll spend.
Airbase, among others, offers:
- With custom rules and spending limits, physical and virtual expense cards
- For managing all aspects of procurement, from procurement to payment, accounts payables are required
- Integrations with third party accounting tools such as Xero, QuickBooks and Sage
- Advanced approvals allow for visibility into all transactions
- Purchase ordering, user management, and custom fields are available to customize the vendor mangagement experience.
- Airbase is more than an expense card product. Airbase is more than just an expense card product.
- It is a vendor management platform that finance teams can use to track multiple suppliers and make payments.
2. SAP Fieldglass
SAP Fieldglass is a combination of a vendor management system and a talent platform. It helps to vet potential hires, select the right candidate and pay freelancers or contractors.
SAP Fieldglass Platform helps finance teams:
- Manage contractors and freelancers. This includes logging timesheets, processing payment and reviewing invoices.
- To avoid fraud, track external talent using milestone-based payments, attendance tracking and budgeting. Time tracking is also possible. Fixed and recurring payments are available. In-depth auditing is also available.
- Approval workflows to approve transactions
Integrate third-party applications into the procurement stack
- SAP Fieldglass is a great tool when your organization relies on contractors, freelancers, or agencies for a large part of its internal functions.
Also read: How to Find A Manufacturer or Supplier for Your Product
Precoro is a vendor management and procurement software that can be used to automate approvals and purchases and provide more visibility into the procurement process through custom workflows.
Precoro’s features are:
- Send documents and approvals via email or Slack to approve them
- One source of truth: Simple analytics that show you how your procurement behaviour is broken down
- Integrations with NetSuite and Quickbooks, Xero and a variety of third-party apps you already use in your vendor management stack
- An intuitive interface
- SSO and rleibale 2 factor authentication increase security
Precoro’s vendor management platform was designed for small to mid-sized businesses that want to reduce manual labor without compromising accuracy.
Procurify offers modern vendor management platforms that offer :
- Businesses can use one source of truth to track and approve their purchasing decisions
- Workflows for custom approval that include as many decision-makers as you need
- Real-time insight that shows expenses in real time
- You can give physical and virtual expense cards to your entire team.
- Detailled insights into individual vendors and product catalogues
5. Kissflow Procurement Cloud
Kissflow ProcurementCloud is a flexible platform for procurement and vendor relationship management that can be used to support large organizations in managing agile vendor management.
- Use simple and easy-to-use forms to create purchase orders
- Use approved purchase requests to generate purchase orders
- A simple platform allows you to manage, onboard, and offboard vendors
- Pay out and approve invoices that are three-way matched (with purchase requests and purchase orders).
- You can view detailed analytics of individual transactions on a daily basis, weekly basis, or monthly basis.
- Integrate the software with your rest of the stack
PRM360 provides procure-to-pay services to businesses throughout the Asia-Pacific region. This vendor management system was created to assist businesses.
- AI can be used to analyze expenses and identify savings opportunities
- Modify their vendor management workflows to suit their needs
- As many stakeholders as possible are involved in vendor management
- You can view and manage product catalogues easily
PRM360 is a more enterprise-oriented vendor management software that was designed to meet the needs of larger organizations like hospitals, construction companies, and pharmaceutical firms.
Tipalti allows you to automate and scale your vendor and accounts payables management.
- To streamline the AP process, collect contact information, banking and tax details from suppliers.
- Automate accounts payables using custom workflows
- Create stronger approval chains for fraud elimination
- Global suppliers can be paid in minutes using multiple channels
- Financial management through compliant channels
- Deep audit trails and notes can help you detect fraud