Vendor Management has become an art, a science and has metamorphized into a discipline which addresses multiple aspects covering reputation, credit, operational and financial risk.
You really do need to have a strong grasp of key areas of risk management. And while this task can quickly become complicated, it doesn’t have to be IF you take the time to use the right tools. Remember how it felt when you tried to cut a steak with a butter knife? If you are an experienced vendor management professional, or perhaps just building out a vendor management program, having the correct tools will make all the difference in leveraging your day-to-day efficiencies.
Here at Venminder, we are meeting with vendor management departments who have been handcuffed into trying to manage and record contracts into an excel report. And while logging of contracts and key contacts is a good first start to a vendor management program, the needle hasn’t moved very far in what we would deem to be a truly comprehensive and compliant vendor management program.
Thoughts to Consider Around the Vendor Lifecycle
Let’s look at the lifecycle of a vendor relationship and some thoughts to consider.
- Initial Due Diligence - How well do you know your vendor? Trust but Verify!
- Contract Negotiation - Are you negotiating terms directly with a new partner or using the RFP process?
- Risk Assessments - How do you assign a risk rating to a vendor? What controls are in place to measure the inherent and residual risk?
- Annual Assessments - How do you assess your vendor on an annual basis?
- Ongoing Monitoring - Did you hear about the vendor who was fined by the CFPB but didn’t inform their clients that they had a pending cease and desist order?
- Reporting - How do you report your vendor management data to the board level?
The above is a typical example of what you might encounter during your day-to-day duties. Based on my own experience, this can cause an enormous amount of data collection, spinning plates and administrative duties. And with all of that, it can really take your eye off the real mission.
While we're talking about it, then let's see how Excel plays out in that equation. Even if you have all of that nailed down, what happens if the guidance changes – can you really open up and adjust hundreds of Excel spreadsheets, even if it’s a minor change?
3 Reasons Why Excel Isn’t a Good Vendor Management Tool for Mortgage Company
Here are some reasons why you should drop Excel:
- Excel is only as good as the data you input.
- When adding multiple people to the general oversight, details can get lost or overridden.
- Managing version control is a great discipline, but based on the lifecycle of one vendor and multiplied by several hundred or even several thousand vendors makes for a labor-intensive process.
There has to be a better way! With the limitations of an Excel database and Sharepoint site to actively manage your vendor panel, your vendor management department would be forced to need several more staff than anticipated. Cost control of FTE expertise could literally run into the hundreds of thousands of dollars if not adequately contained.
To learn more about how you can benefit from a dedicated vendor management solution, check out our case studies and request a demo.