Vendor Management
The Key to Leveraging Relationships
and Saving $$$ 

Mergers, acquisitions, divestitures and name changes! It’s almost impossible to really know who your vendors are, let alone how much business you’re doing with them.

A Vendor Management program can help you not only find out who you’re doing business with, but help you do business with them more efficiently and effectively.

Here’s an outline of a five-point vendor management program that will help you save significant dollars:

1. Identify your vendors - This may seem obvious, but many companies lack basic information about their vendors. Information in your purchasing and accounts payable files may be inaccurate, redundant, out of date or incomplete. Review your files to eliminate redundant vendors. Link related vendors to enable meaningful reporting.

These activities can take a lot of effort but are critical to achieving significant payoffs. Some direct immediate benefits are fewer duplicate payments, fewer checks, and lower postage.

2. Beef up vendor information - Augment your vendor files with information that’s useful for analysis. Basic information you may want to add includes SIC codes, taxpayer identifiers, telephone numbers, type of organization, types of products or services, how long vendors have been in business, and size. More important, find out if vendors are EDI capable, are ISO 9000 compliant and take Procurement Cards.

This additional information is a starting point for the financial planning and analysis that leads to smart decisions.

3. Analyze your expenditures - Determine where money is spent - by vendor, type of vendor, areas of your organization, trends over time. Build databases and analyze data to better understand how you’re doing. Benchmark against others. Find where savings and opportunities exist.

4. Buy, spend and pay smarter - Here’s where you begin to reap the dividends. With better information about spending, you can negotiate better deals.

5. Make life easier for vendors (and yourself) - Develop a vendor setup and verification process. Where appropriate, get electronic inputs from vendors using EDI or Procurement Cards. Approve, pay and reconcile electronically. Provide online access to vendors to reduce phone inquiries.

Regardless of what stage you’re at, contact RECAP to help you define and enhance your vendor management program.