The Synergy Post

What is vendor relationship management?

By now everyone has heard of the concept CRM (Customer Relationship Management), this is a complete process where you manage all your customer management needs. But what about managing your vendors?

As with a CRM system that is completely customer driven, VRM is a concept solely geared for the management of a business’ vendors or suppliers. Is there really a need for such a system? And will a system such as VRM guarantee cost savings to a company.

VRM can also be seen as supplier management, it is a help line designed to manage all your vendor or supplier issues, data and correspondence. VRM is not a stand-alone system but can be customised within a CRM system. VRM is a great helpline in setting up workflow systems customised to your specific business needs.

Order generation can be simplified and stream-lined to ensure better ordering processes and payment plans. Seeing that VRM is not a financial system, all data that gets generated from VRM can be exported to a business’ financial system for easy payment and accounting generation. Price negotiation can be set up according to the various vendors according to credibility or delivery time frames. Purchase orders can be set up to be generated automatically and systematically by the user’s specifications.

Escalation rules can be set up to automatically trigger and send emails or on-screen notifications to ensure follow ups, advanced warnings and certain processes that should be followed. All meetings with vendors and suppliers can be logged and reported on. Calendar based management for tasks such as phone calls, emails and documentation simplifies the user’s tasks even further. Any field or task that gets created in the CRM system can be reported on in VRM.

The great thing about VRM is BEE management, specifically aimed at the South African market. Vendors can be rated according to their BEE status, this rating gets done when creating the supplier details and is automatically part of the purchasing and ordering workflows. This workflow manages all preferred BEE vendors. 

This brings me back to the issue of whether VRM has the capabilities of saving businesses money. Yes it can and it will.  As explained, it is easy to set up price negotiation capabilities within VRM the price negotiation capabilities can be customised to suit the supplier and the customer.

If you are a business owner that already has a successful CRM system installed, why not take the plunge and customise your system to handle VRM capabilities? You have nothing to lose really, only greater ordering workflows and vendor relationships to gain.