Digitally Transforming Vendor Management
Vendor Management is often not given the air time it deserves. As consumers, we walk into the shop, pick up the product we’re after and done. We don’t even think for a second about what it took behind the scenes for that product to make it to the shelf. And a critical part of that is vendor management.
But the truth is vendor management isn’t easy and like any core process, done well it can be a huge differentiator and done poorly it can really hold you back. In the retail sector, where margins are often incredibly tight, forging strong, long-lasting supplier relationships is critical for remaining competitive.
But before I start digging deeper into the topic, it’s probably worth defining what vendor management is for those who don’t work in the retail sector day in and day out.
A vendor is simply a person or business that makes goods or services available for another company. In simple terms, the chain is as follows: a manufacturer vendors their goods to a wholesaler who, in turn, vendors to a retailer who lastly vendors to you the customer. For the purpose of simplicity, when I speak about vendor management in this article I will be focusing more specifically on the relationship between the retailer and wholesaler in that chain.
So how does a retailer go about managing the relationship with their suppliers?
As I mentioned at the top, managing the retailer-wholesaler relationship is critical to a retailer’s success. The benefits afforded a retailer through the special offers, priority service and product advice a strong relationship provides can be a fruitful source of margin. In the modern world, retail has increasingly become about fast-fashion trends and this means if a retailer wants to remain competitive, they need to be selling the best brands, at the right price, at the right time. And, for that, you rely heavily on a cooperative partnership with your suppliers.
I don’t use the word partnership lightly. From the perspective of the retailer the benefits are clear, but it’s a mutually beneficial relationship because the wholesaler benefits just as much from a strong relationship with the retailer. Ultimately, the more the retailer sells to their customers, the more product the wholesaler shifts too. Therefore, perhaps the best indicator of the strength of the relationship is the amount of collaboration going on between the wholesaler and the retailer. As I said, the wholesaler can tactically offer product advice and special offers that enable the retailer to sell more of their stock.
Now that the advantages of a strong relationship are clear, how do you actually go about forging one in the first place?
As always, digital has the power to give you an enormous helping hand because ultimately this is an information game. How can you hold your wholesaler to account if you don’t fully understand the service they are providing you?
When it comes to the consolidation and visibility of information, nothing is better placed than the ServiceNow platform. As a result, ServiceNow have created a Vendor Management application specifically designed to help you manage the relationships you as a retailer have with your wholesalers. This is achieved by aggregating all essential information that a Vendor Manager needs into one intuitive, logical view. This is achieved by pulling critical information from other areas of the platform. For example:
Contract Management allows you to manage the active contracts you have with a vendor
Asset Management allows you to track and analyse assets that relate to a specific vendor
Vendor Risk Management allows you to manage the risk associated with your vendor portfolio
Continual Improvement Management allows you to track performance improvement initiatives a certain vendor might be linked to
Pulling all of this information into a single application suite makes it easy for you to assess Vendor Performance in real-time by monitoring SLAs, compliance, satisfaction scores and service credits. At the same time, you have a full view of other vendor-related information like contract details that allow you to plan renewals.
So, I ask you, how strong are your current relationships with your vendors? What measures are you using to define the strength of this relationship? Could it be improved through digitalisation? What does this improvement mean for your position in the industry?
If you are asking yourself any of the questions above, let’s arrange a conversation to discuss how we can support you using the ServiceNow platform. If that would be of interest, please reach out to firstname.lastname@example.org or you can reach me personally at email@example.com.