How to improve your vendor approval process

Just like people, no organization is an island. No matter what your business does, you probably work with others to achieve your goals. Besides your clients and other stakeholders, your most vital partners will be vendors.

While you focus on business operations, vendors take care of anything from tangential tasks to content marketing. Landscaping, paper shredding, IT services, janitorial services, catering, office supplies, software, furniture — vendors provide all these and more, making vendor management an indispensable skill for today’s leaders.

One simple way to upgrade vendor management is to improve your vendor approval process so it serves not only your business but also your vendors.

The fundamentals of vendor approval

The vendor approval process evaluates and welcomes vendors to your company, starting things off right for both of you. Mastering it is one important aspect of vendor management — because a weak process leads to lost time and money, strained business relationships, and stressed employees.

These are the basic steps of vendor approval, which can change depending on company policies and industry:

  • The company chooses a vendor after research and bidding.
  • The company examines vendor proposals and assesses risk.
  • The company draws up contracts detailing expectations and requirements, and the company and vendor sign contracts.
  • The company adds the vendor to the approved vendor database.

Improving vendor approvals

The best way to improve this process is by reimagining all the elements. That way, future improvements will require only minor tweaks.

Assess supplier needs

Whether you need better coffee or different materials for an exciting new product, the first step to improving your vendor approval process is making sure you have enough suppliers to meet your goals.

Keep your growth and KPIs in mind as you go through the list of vendors you’ve worked with and brainstorm the types of vendors you’ll soon need. That new product may increase your vendor count from 10 to 15.

Organize suppliers

With your team, examine each vendor you currently use to see if the relationship is still working for you. Perhaps you don’t need as many office supplies because most of your team is remote. Reevaluate each vendor based on quality too. Maybe you’re not happy with the cleaning or delivery company.

Once you’ve done this, update your list of approved vendors by removing redundant vendors and confirming contracts. Also edit your list to what’s essential. For example, do you need two vendors to provide similar services when only one will do? Or maybe a current vendor can give you more services at a reduced price.

As you complete this step, don’t hesitate to deal with vendors who are giving you more trouble than they’re worth. Perhaps one vendor is always late with deliverables or a parts supplier continues to turn in shoddy material that your customers have complained about. If someone is slowing you down or not holding to their part of your agreement, politely end the business relationship.

After this step, you should have an updated and complete list of your suppliers as well as action items for your team to find new vendors or negotiate new rates with existing ones.

Evaluate personnel needs

Do your managers need to delegate aspects of the vendor approval process so they have time for tasks that fulfill big-picture goals? Or maybe disastrous situations with past vendors have shown that you need a risk manager to analyze each vendor and their references.

If your business is growing, chances are your vendor needs will change, impacting your team. You may have to hire more people for your vendor management team or even open a new purchasing or quality control department. Review your growth KPIs to determine the right time to grow your team.

Communicate with employees

Especially in a small business where workers wear many hats, lines between responsibilities can blur. Take time to clarify roles with your team members to set or reinforce expectations.

This is especially important to structure an approval workflow where specific team members take charge of requesting approvals or handling approvals themselves. If you haven’t already, revisit your rules for who can approve vendors based on type and contract amount.

Rework your workflow

Now that you have new standards in place for how your team works with vendors, put them into motion with a revamped vendor approval process. Present a visual representation of the workflow, and allow your employees to provide input. If possible, no person should have more than one task within the workflow.

Ultimately, a comprehensive vendor management policy should inform your improved workflow. Editing this policy and sharing it with your employees empowers them with the knowledge about what to do when things don’t go right.

Automate the process with software

If you’re still using manual processes to approve vendors, now is the time to make updates. Keep vendors organized with a digital solution that can do the heavy lifting for you. This is crucial to employee accountability, process speed, visibility, and business organization.

Plenty of vendor management systems on the market offer features that provide security, compliance, invoices, analytics, and data management. When you’re shopping around, think about how the program meets specific needs.

Venminder, for example, offers access to third-party risk managers who can ensure you’re doing your due diligence. This is appropriate for smaller organizations that can’t hire a risk manager. Other programs communicate directly with suppliers or are designed for specialized industries.

Get even better

Just because you take steps to enhance your vendor approval process doesn’t mean you should fully relax. Fannie Mae recommends that those who use third-party services review their approval procedures each year. Establish a review system that routinely judges vendor management — and vendors themselves — against business needs and legal guidelines, and don’t hesitate to make necessary changes.

You can delegate these reviews to managers who have more day-to-day contact with vendors, while your approval software doubles as an accountability portal. But you should occasionally view the processes in your approval software to make sure no one is taking shortcuts.

JotForm Approvals for vendor management

No matter what kind of approval workflow you have in place, it likely includes a handful of forms. That’s why JotForm Approvals is an ideal solution for enhancing your vendor approval process.

With JotForm Approvals, you can create and customize your own vendor application forms and then convert them into steps in your approval process. No matter who fills out forms — potential vendors or your employees — JotForm creates a database of all information that you can view from any device and with the JotForm Mobile Forms app.

If your company uses PDF forms, you can use JotForm not only to convert them into online forms but also to collect information in one place.

Your team members can receive contracts, view pending approvals, analyze data with JotForm Tables, and send forms to specific approvers. And changing your workflow is as easy as dragging and dropping and editing conditions.

Proper vendor management will set you on a path to success. And setting up vendor approvals with JotForm Approvals will give you peace of mind as well.

Business photo created by katemangostar – www.freepik.com

This article is originally published on May 04, 2021, and updated on May 06, 2021.
AUTHOR
Helping executives and business owners from every industry to keep them on their path to success. You can reach Kenneth through his contact form.

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