New Vendor Relationship Management Best Practices for 2023

Vendor relationship management is a business process that empowers your organization to mitigate risks, optimize your SaaS spending, and improve the overall business performance.

Following the best practices will help you improve the vendor relationship management process.

As the business grows, it becomes less feasible for you to run every operation on your own. To simplify the tasks for the internal teams and to boost business growth and productivity, you procure various technologies and tools like on-premise software, SaaS apps, etc.

In a SaaS procurement process, vendor relationship management plays a crucial role. It is a process through which organizations control costs and minimize risks. This helps you to achieve maximum benefits from the vendors throughout the lifecycle of your contractual relationship.

The terms vendor and supplier look quite similar and are used interchangeably. But the key difference is that supplier is the first link in the supply chain, and the vendor is the last. Moreover, a vendor can be a reseller of software produced or developed by a SaaS supplier. 

Vendor relationship management helps strengthen the IT procurement team and vendor relationships to achieve a mutual goal and establish trust. It will add value to the organization and maximize ROI.

In this article, we will walk you through the best practices to make a successful vendor relationship.

Vendor Relationship Management Best Practices

1. Enforce a Clear Vendor Management Policy

​​With the increase in SaaS adoption, there are increases in data security concerns. When working with third-party service providers, your company should have formal documentation. It will inform the IT teams and other stakeholders of the official vendor management policy.

Vendor management policies should be periodically reviewed and updated over time. This helps to improve performance, operations, and costs. 

Clear vendor management policies will help to align your company's procuring strategies with the overall strategy. It will enable you and the vendor to be on the same page and help you collaborate better.

Mutual and transparent policies will make the vendor relationship stronger and better. It helps to set benchmarks, reduce vendor performance and compliance risks, and evaluate the vendors.

For internal accountability, always include a clear outline in the policy that describes official committee roles and responsibilities.

2. Proactively Manage and Measure Vendors' Performance

Nurturing and managing vendor relationships is critical to balance a healthy collaboration. This will deliver benefits to both parties. Exchanging honest feedback and addressing unexpected issues will help to strengthen the vendor relationship.

It is important to mention the issues that have arisen throughout the year. Moreover, critical issues should be addressed immediately so that issues are prioritized and resolved sooner. This will help to run the operations smoothly.

Monitoring vendors will give you clarity on their annual performance. This will give you an opportunity to praise and provide feedback regarding the vendor's performance during the past year.

The best practice is to establish key performance indicators (KPIs). The KPIs will help you understand what you want to monitor. It includes qualitative observations and data that you capture and measure objectively. 

Evaluating vendor performance with quantitative and qualitative factors enables you to accurately determine the vendor's performance. Additionally, conducting in-depth reviews with your vendors enables you to identify the change in business requirements.

3. Learn About Your Vendors’ Business and Operations

Companies can earn a lot of insider information about the vendors' business and operations management. This, in turn, can help you align your business goals and strengthen the relationship. 

Learning from vendors' business and operation techniques provides valuable insights into your workflow. These insights help in comparing your business requirements and operations.

Moreover, knowing your vendors' business will help in better negotiation techniques, strong contracts, and building a better relationship overall. Further, it makes the vendors realize that you are interested and invested in their business.

4. Add a VRM solution to your SaaS stack

The best practice for successful vendor relationship management is adding a VRM solution to the SaaS stack of your organization. The solution will focus on automation, onboarding, closer engagements, and managing the vendors and their spending. 

A good VRM solution will help you streamline and simplify vendor relationship management processes into one centralized vendor management system and provide you with real-time insights. It will help you avoid time-consuming tasks like spreadsheet vendor information, manual onboarding, email reminders, etc.

Without a solution in place, it can be challenging to maintain and manage an extensive list of vendors. 

Vendor relationship management software makes possible quick and easy interaction between app owners and vendors. It acts as a communication channel that facilitates real-time vendor communication and strengthens your vendor relationships.

Some of the benefits of having a VRM solution are:

• Elimination of vendor-tracking in spreadsheets.

• Offers better oversights of renewals.

• Streamlined cost tracking.

• Provides real-time insights that drive to make better strategic decisions.

• Helps in minimizing waste.

How can Zluri help with vendor relationship management?

Zluri is a SaaS management platform that enables you to manage your SaaS vendors and their contracts and licenses. It gives you easy access to metadata, reducing your software spending and increasing overall ROI.

With Zluri, all your contracts are stored contextually with other vendors' information so that you can access them when required: during renewals, audits, termination, etc. We can help you easily assign tasks and track the process. It also acts as a platform for collaboration.

The platform helps you determine the payment terms and ensure all payments are made on time. This is very useful when you are dealing with multiple vendors. Zluri automates the whole vendor management process.

Zluri has a strong automation engine that enables organizations to give or revoke access to vendors with a few clicks. It automatically builds the inventory of what access vendors have, and deprovisioning can be done with ease.

Additionally, it takes data backup or data transfer during vendor offboarding effortlessly. There is no chance of data loss in the organization. Further, it removes or deletes the vendor profile.

Implementing Zluri helps you streamline the vendor management process, including the onboarding and offboarding of vendors. It has an automated vendor management system with all the features required to smoothen the process and manage the complete vendor lifecycle.

Zluri notifies you of your upcoming payment and contract renewals. Also, gives you sufficient time to make decisions about whether you need the app.

Renewal Calendar

For contracts, you get alerts 30 days, 15 days, and 1 day in advance. For payment, you get 7 days and 1-day alerts. You can set custom alerts as well. This helps you prioritize high-value contracts and strengthen your vendor relationships.

Moreover, Zluri helps IT teams discover, track, manage and monitor the SaaS apps in the organization. It provides you visibility into your SaaS ecosystem and optimizes your whole SaaS stack. 

Zluri helps you can view all the SaaS subscriptions in a single platform and eliminate SaaS wastage. It provides IT teams greater control over their tech stack. Zluri also automates your IT tasks like procurement, onboarding, offboarding, etc.