Automating Vendor Vetting Makes Buyers and Suppliers Happy
When repetitive tasks in vendor vetting are automated buyers and suppliers are happier.
Recently I was discussing the steps a prospective client was using to vet new vendors.
The CEO shared with me that they had grown dramatically in recent years. They were now serving a much larger geographic area.
This resulted in a significant increase in the number of suppliers that they needed to utilize in each geographic region based on their business model.
They also realized that their current method was bogging them down. Currently they relied on suppliers completing PDFs and filling in Excel and Word tables. Each supplier would also submit other requested documents, typically in zip files.
Once the information was received it would have to be reviewed and summarized manually.
Suppliers had to resubmit the same basic information every time they wanted to bid on work in a new geographic area. The company didn’t have a way to conveniently update the information already submitted.
I think you get the picture of people working long hours and becoming bleary eyed.
The CEO realized that the system was probably keeping some suppliers from participating in RFPs because of the hassle factor. He also believed that they might inadvertently be taking on additional risks if proof of insurance or compliance with government requirements were not up to date.
I assured the CEO that their situation was very common and that moving from an offline system to an online platform was a step that virtually every client had gone through.
We reviewed some of the information that they typically required in the vetting process. Here are some of the items and information they asked for:
- Agreement on the terms and conditions of doing business with the company
- Organizational history including date of formation, officers, proof of good standing in each state they operated in and W-9.
- Audited financial statements including supplemental information designed to identify weaknesses or economic dependence
- Aggregate insurance coverage and per occurrence limits by policy type
- Banking references and contact
- Customer references
- Company policies and training in health and safety
- Experience in providing similar products and services
The items I have listed were just the basics. In all they had over 60 questions to be answered and many documents to be submitted.
It didn’t take long for the CEO to realize the significant time efficiencies that could be gained by automating the process.
They also realized that their suppliers would be very happy to only supply the bulk of the information once.
In addition, every item that would require a recurring update could be set up for automated reminder notices and exception reporting. Items that would need updating on a less frequent basis could be set up the same way simply by extending the window for updating.
The CEO also confided in me that he didn’t think they would be able to sustain profitable growth if they didn’t start automating the procurement function.
In my experience, the benefits from automating any repetitive part of the vendor vetting process are significant.
I can also assure you from personal experience that suppliers will be more willing to provide price concessions since you are making their life easier.
Action Step: Finding the right tools for your needs can be a challenging process but it doesn’t have to be. If you are uncertain where to start a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you need. If you want to go explore this topic in greater detail, please contact me.
EC Sourcing Group is one of the companies I represent because their tools have been created by dedicated and experienced sourcing professionals. They know the day-to-day challenges your team faces and have built their tools to solve them. If you want to know how, I invite you to request a demo or 30-minute discovery conversation so you can experience the platform, process, people, and tools. You can reach me at 973-936-9672.
Next week I will continue on this same theme so your organization can improve your bottom line.
If you would like to know more ways to reduce costs without changing the way you do business, simply give me a call or send me an email with your contact information and the best time to reach you.
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Until Next Time, I Wish You Great Success in Your Business and in Your Life