Best Vendor Management Software in 2024

Vendor Management Software: Overview 

Vendors supply goods and services to a company and these vendors are in the form of suppliers, contractors, manufacturers, etc. A VMS vendor management system coordinates the business relations of a company with any vendor or supplier from the purchase of goods and services to the submission of timecards and the final payment. Vendor management software further covers other technicalities required in between such as portal management, request for quotations, onboarding and tracking.

VMS vendor management systems are meant to make business operations smooth with costs controlled and risks reduced. The vendor management process is critical for any business to create a healthy relationship with vendors and ensure timely service deliverability. Vendor software also helps manage rewards and penalties for the vendors to prevent any negligence from the vendor’s end.

Vendor Management Software Features

Attain maximum value from all your supplier relationships and contracts with supplier management software. Vendor management system software helps minimize the risks by managing contracts, negotiations, credit terms and other terms and conditions with your vendors. The following are the key features of the vendor software:

Vendor onboarding

Vendor onboarding is a critical part where new vendors connect with your business on certain pre-set terms and conditions. Vendor onboarding software involves registration forms with qualification tick boxes for vendors/suppliers to fill up before submitting. Registration forms also include the payment terms to help with hassle-free purchase of goods.

Vendor tracking

The best vendor tracking software offers auditable records that can be tracked as and when required. It helps track all documentation processes and communication made with each vendor so far. You can also track which document was signed by whom in these auditable records provided by the best vendor software.

Vendor Payment

Manage accounts, invoice processing, and all the internal finance-related tasks with vendor payment software. Bulk payouts or splitting transfer, all can be done with VMS vendor management system software. With auditable transactions in place, you can manage all payment records as per the agreement.

Vendor Portal Management

Portal management is the key to vendor relationship management. Vendor portal management software plays an important role during the product life cycle stage. It is aimed majorly at creating a self-service portal for your vendors where they can manage their contacts, product details, orders, etc. Moreover, all your engagements and dealings are automatically updated at the vendor portal to avoid any confusion.

Vendor Risk Management

Supplier portal software solutions help maintain the detailed and up-to-date profile information of vendors. These vendors are segmented further based on the location, category and business unit. With vendor risk management software, it becomes easier for a business to perform due diligence on vendors service/product quality and mitigate risks of any kind.

Vendor Relationship Management

You can take quick business decisions by integrating vendor relationship management software with the supplier network and procurement processes. Vendor software is important to improve your business relations with the vendor to reduce the chances of the discrepancy.

Audit Vendor Activities

Vendor management software helps create records of invoices, vendors’ performance, and transactions with vendors that can prove handy at the time of financial audits. Reports generated by the best vendor management software also helps with vendor audit activities to analyze if they are adhering to the terms and conditions.

Vendor Response Analysis

You may think you have contacted the right vendor but maybe there is still a lot of assessment that is pending. Vendor response analysis would do this job for you. How this system works is it compares side by side strength of weakness of every proposal made by a vendor. With a more practical answer available at your disposal, the task of choosing the right vendor is easier now.

Common Benefits of Vendor Software

Better decision-making, reduced risks, and cost-cutting are key benefits of using vendor software. Aside from these, the other key benefits of the software are:

Automated RFQs for multiple items

Automated requests for quotations help save time without the hassle of re-entering information related to pricing every time. You can thus make simultaneous inquiries for the price of multiple items from multiple vendors with a VMS vendor management system.

Identify shortages with smart ordering

The repurchasing option within vendor management software helps make smart product reordering decisions based on the expected timings of stock delivery by vendors. Thus, you can reorder items as per the available stock or use multiple orders to combine purchasing lists.

Simplify Order Management with Syncing

Some of the best vendor management software solutions sync with the existing inventory and projects to avoid interruptions occurring due to new software installations. It further helps in simplifying order management processes and saves both time and resources.

Managing Contracts for Automating Workflows

The more automated workflow is, the better is the entire business process. With vendor management software's contract management capabilities, it is easy to manage the contract reviewing processes for reviewing tasks and alerting the stakeholders.

Dynamic Reporting

Dynamic reporting keeps you updated about the current status of vendor relationships. These are further useful in assessing vendor's risks and calculating key performance indicators. Further, an end-user can generate reports based on this available information by using push-button options.

Data Management for Vendor Profiles

Supplier management software offers dynamic work queues for all the bulk editing that is done to look after vendor profiles. These work queues can further be used for managing review dates, assessment findings, and documents/contracts.

Supplier Management Software Functionalities to Manage Vendors

Frequent monitoring and collaboration can be easily achieved by installing vendor management software. The important functions with which the vendor management system makes the entire process for procurement, delivery, and payment streamlined are:

Promotes Vendor Engagement

In business, you have to deal regularly with multiple vendors on a regular basis. Vendor management software helps centralize all communication with a vendor in the past so that you can resolve their queries on time. Also, vendors get a self-service portal to manage their own product details and track their performance. These features of a vendor management system help increase the engagement of a quality vendor with your brand.

Vendor Classification & Risk Assessment

Not every vendor can prove to be significant for your process. Some of them might even pose compliance risks. Vendor management software helps classify vendors as good or risky based on pre-set metrics to help you understand how you need to spend your time on vendor relationship maintenance.

Helps Businesses Be Audit Ready

Vendor management software helps manage vendor contracts, payment history, and all other information that will be required at the time of financial audits. Even details related to vendor selection and agreement can be easily presented to assess the risks involved in terms of finances.

Streamlines Payment Management

Payment processes when automated help companies save time and resources. A vendor management software helps with handling contractor/vendor payments, expenses and such contracts. The more organized these payment processes are, the better are your chances to save on unnecessary expenses.

How to Find the Best Vendor Management Software System for Your Business

Managing purchasing orders or vendor details, a vendor management tool should provide all basic features to streamline your relationship with the vendors. Keep in view the following technicalities before finally selecting any vendor management software:

Work hours logging

The best vendor management software comes with a built-in time clock to track a contractor's or vendor's billing hours. Further, with the same time clock, it is possible to keep a track of payments done and those pending along with viewing other billing information.

Regulations and Compliance

Each company or business has a specific kind of workflow requirement, training procedures, and functions. Therefore, you should choose a vendor management tool that specifically suits the kind of business you have. For instance, the vendor management requirements of a construction business would be different from that of a banking institution.

Centralised Information Base

Look for a vendor management solution that has all the key details regarding policies, finances, contracts, security policies and insurance certificates located all in one central place. It is easy to access, store, retrieve and collect information from one centralized location. Businesses rely on this to save time and resources.

Performance Metrics

Performance metrics help measure the quality of a vendor’s performance so that your business keeps running smoothly. Additionally, this metric can also be used for measuring contract compliance to ensure that vendors/suppliers measure up to the deals made till the very end.

Major Factors on Which Vendor Management Tools Are Priced

Vendor management software solutions help businesses derive value from their relationship with the vendors. You can review different vendors base on their product quality, pricing details, service deliverability and payment support.

Vendor Management Software Features You Require

There are a few essential vendor management software features, which are available with every solution. However, you may need a few advanced features, depending on the complexity of your vendor management processes. Some of the unavoidable features are:

• Contract management tools - Contract management tools built for the multi-vendor scenario are critical for looking after and managing all documentation processes. These are further useful for monitoring status of contracts as these are necessary for quick decision making.

• Performance assessment indicator - Any indicator highlighting the performance of vendors helps businesses save costs in the long run. Performance assessment indicators offer an integrated overview of a vendor's performance to eliminate the risks associated with a supplier/vendor with an average quality of products/services.

• Centralized vendor information - Multi-vendor support for multiple items isn't an easy task. Centralized vendor information support is mandatory for saving resources, as it is easy to access all relevant information about a vendor in one place.

Customization Required

You may require a vendor management software with certain features for vendor audit, maintenance and invoice generation. Based on your requirements, the best vendor management solutions can be customized, and the price varies accordingly.

Number of Vendors to be Managed

Most vendor management solutions provide scalable features to ensure that you can manage as many vendors as you can from a single platform. However, certain vendor management tools are available under different pricing plans, which has a capping on the maximum number of vendors.