When we stop and think about what Independence means to so many, I believe many of us forget why independent thinking is so important. Much like our forefathers did 242 years ago, they took a stance on the “status quo” by thinking “independently”.
These thoughts allowed those brave men and women to over throw the tyranny of rule at that time, and use this independent thinking to drive away from the dictatorship they were under and strive for freedom of: Religion, Speech, Press, Peaceful Assembly and to Petition to Government for a Redress of Grievances.
Yet, this independent thinking was not an opinion of one but of many, and at the end of the day it took a Declaration of Independence with this collective input to drive one INDEPENDENT thought, which governs our nation and has created the ledger of accountability we strive to abide by still today.
In business, we need to also thinking independently and use our wisdom and or experience to shed light onto business practices to improve upon them and to drive profitability. However…certain decisions must not be formed by the opinion of one but, from a collective independent thought which governs the best return for the entire organization. These thoughts are to come from one man, woman, division or leader but, a singular collective thought for the common good of the business.
In the business of vendor management and cost reduction practices we often see this decision making coming from one division. Historically, a vendor management function reported to areas like information technology, procurement or the chief financial officer. And today with strong risk-related activities, more likely it will sit in compliance or risk management, or even directly to the risk committee depending on the size of the organization.
So how and why is an independent collective thought so important? Well, for starters, if this discipline reports to a single division, it’s likely to have a very narrow focus or have decisions made predicated only on financial concerns. Additionally, you wouldn’t want it devoted to a specific business line or business activity, as it would be naturally skewed to meet that departments needs first versus the best for the overall organization..
Vendor management and billing optimization services should be an independent group/department inside your company, an individual apart from any one division or outside of your company independent of “organizational blinders”.
Here are 3 important reasons why:
- An independent focus outside any one department, provides some a strong degree of autonomy and the ability to audit interdepartmental actions. This of course can only be accomplished with the senior leadership team supporting the thought of a balanced approach to decision making and risk management.
- Most regulatory guidance is predicated on the board and senior managements involvement. If vendor management is a detached area, then the participation does not get diluted in the day to day work of another business area.
- The goals of a well-managed third party risk program are far different than the business objectives of any one branch or organization. Therefore, vendor management will stay more on track if it is maintained by a separate group.
Failure to manage your vendors in this way reduces transparency throughout the organization, creates pockets of unnecessary expense, allows cash to be wasted unnecessarily and reduces the overall profitability of an organization which leads to: poor financials, reduced evaluation, lost investors, and often times to the demise of an organization.
However, companies are fixing this problem every day by finding external 3rd party resources to guide them through this independent thinking, and break away from the autocratic or vacuum based decision making and create the appropriate level of vendor accountability, compliance and full transparency needed to manage your vendor risks best in the future.
This IS what our team at LIMITLESS does All Day and Every Day. We take this burden off of your people – so they can focus on the bigger problems they face daily. We partner with each member of your team so they feel confident they can maintain the overall control of these relationships without losing vendors they value however, DO gain the critical accountability and transparency the entire organization needs to make better decisions. The support we provide, like our forefathers provided for us as a nation, allows your independent teams to no longer worry about handling the complexity of these relationships. Instead they can focus on growing the business, taking more overall market share and ensuring the success of your organization.
Contact LIMITLESS today for a FREE CONSULTATION to discover how to get control of your unmanaged spend and reduce expenses in your business.
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