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Top 3 Vendor Management Challenges in 2021

With an ever-increasing number of potential vendors, it has become imperative for companies to devise strategies that can mitigate vendor risks. They need a robust vendor management process that can analyze different contract terms, rates, and efficiently address vendor management challenges. Businesses must identify risks based on the size of their company and find effective solutions to address them to gain a competitive edge in the market.

Addressing vendor management challenges is crucial for companies looking to sustain their businesses in the competitive market space.  Because Limitless Technology works with a wide range of companies, we can see across industries and markets, to guide in overcoming these challenges.  Below are the top challenges we see our clients face every day:

Challenge 1: Complex vendor ecosystem, which creates a business risk
Companies engaging with hundreds of vendors expose themselves to various compliance and security risks. They need to categorize vendors based on their strategic value and risk and communicate expectations to mitigate vendor risks.

Challenge 2: Contract management
Contract management is a major challenge for companies as contracts are often assigned to teams involved with vendors and the rest of the departments lack proper visibility.  The contract review and bill audit process, or as we call the Billing Optimization process, should be an ongoing review process, with reviews scheduled regularly.  

Challenge 3: Cost optimization
Companies strive to find opportunities to optimize costs. However, this requires them to identify sourcing opportunities that can streamline and standardize business processes. They need funds that can drive business value in areas like business innovation, competitive differentiation while meeting organizational goals.

Vendors are key stakeholders in any successful business, and you need to take a strategic approach to mitigate vendor management challenges. You might be working with hundreds of different vendors, all with different contract terms and rates.  Effective management is critical to not only the financial viability of the company but also to its overall strategic success.

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