Vendor Management Services
What Are The Benefits?

Vendor Management Services (VMS) are a group of services that are designed to reduce costs, improve vendor performance and also identify and manage risk. These services include:

• Sourcing of vendors, many VMS consultancies have market knowledge.
• Negotiating with vendors and completing the Master Agreement contract.
• Identifying of opportunities to cut costs and enhance vendor terms. Enhanced management information feeds the purchaser with considerable information on costs, inventory and lapses between demand and delivery.
• Identifying vendors that are more appropriate. Sometimes there are suppliers that will provide better terms and price levels. VMS consultancies often have this market knowledge.
• Identifying opportunities to consolidate vendors. Providing vendors with larger or more frequent orders, often results in better pricing and terms.
• Evaluation of current vendors with respect to their performance, quality and pricing structures.
• Evaluation of vendor catalogues in order to find products that are more appropriate.
• Managing the transition from one vendor to another, which can often result in a break of supplies and loss of income.
• Monitoring and evaluation of vendor activities including quality and contractual and Service Level Agreement (SLA) compliance so that the vendors comply with agreed delivery times, invoicing procedures and pricing levels.
• Identifying and monitoring risk, which is particularly important when being supplied from third world countries.

Many companies expect that Vendor Management Services will accrue the following benefits:

• Total cost of procurement will be reduced by identifying areas to save money and fine-tuning the procurement process.
• Vendor performance will be enhanced by the regular reviews and improvement in processes, communications and purchaser/vendor interaction.
• Improved information flow between the purchaser and the vendor will increase management information to both companies. It will also allow the purchasing company to cut inventory costs by optimal purchasing.
• Efficient purchasing will enhance profit levels and provide more fruitful customer supplies.
• Experienced staff are released from problem solving to concentrate on core purchasing processes.
• Vendor Management Services keep the purchaser/vendor relationship balanced and both companies goals aligned.
• Continual review of your vendor will lessen service problems and service failures. If problems do occur, alerts as to the any penalty costs will be activated.
• VMS will lessen misunderstandings and miss communications.
• Where there are legal obligations with any purchase – such as in staffing, a VMS will ensure that these obligations are met.

Vendor Management Services are prevalent in the staffing environment, particularly when a company employs many temporary staff. Many Vendor Management Services consultancies will provide the above services using a combination of staff and computer systems.

 

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