If you’ve always managed your business with paper files, it can feel like a tough sell to move to a digital system. You may think you have to learn a whole new application, that the learning curve will take forever, and that it’s not even really worth the shift.
But the reality is that managing your vendor data digitally can save you more than just money, though you’ll save that, too. But what the digital shift really gives you back is your time and energy.
When you move invoices, orders, payments, and vendor information to an online tool, you have a centralized location you can pull from at any time for any reason. No more searching for missing paperwork or paying an employee to fill out and file for you. All the information you need is a few clicks away.
In this step-by-step guide to organizing and tracking your vendor data, you’ll learn everything you need to get started.
1. Choose the Right Vendor Management Platform
It would be silly to decide to centralize all of your data and then end up with a partner that doesn’t meet your specific needs. So make sure your primary goal when choosing your vendor management software is that the software works for you, not the other way around.
The best platforms will be easy to use, intuitive, and onboard new vendors quickly. You should also be able to customize the application to fit your business and integrate it with your other tools.
Here are the key features any solid vendor management platform should have:
- Centralized database where you store vendor profiles and docs
- Invoice and payment tracking
- Task reminders
- Data export and reporting functions
- Access controls that are role-based for your team’s security
Keep in mind that this platform should become your single source of truth for your vendors. So you should be able to perform pretty much any related function from here.
2. Collect and Centralize Your Vendor Data
Once you’ve chosen your software, you’ll want to gather all of your vendor data from existing paper files or other storage locations. Pull up and print out spreadsheets, empty out file cabinets, and call up old emails. Getting all of the details together now means you won’t lose them in the shuffle as you transition to digital.
Now, create a new file for each of your vendors in your new platform. Every vendor profile should include:
- Vendor contact information and tax IDs
- Any contract terms and dates you currently have
- Banking and payment information
- Product or service catalogs
- Past orders and invoices
Once you have all of the vendor data online, it’s easier to share across your teams. You’re also more prepared now to perform searches and audits when the need arises.
3. Put a Process In Place
Now it’s time to have a clear, well-established process that every looped-in team member can follow. After all, what’s the point of having a new application if the right people aren’t using it as they should? Make sure everyone on staff who will be involved knows how to add, approve, and maintain vendors in your system.
One of the first parts of this process is to assign responsibility to the correct team members. Who enters the data? Who approves it? And who’s performing regular reviews? Next, make sure you have a naming convention in place, like “VendorName_20205-001.” Finally, automate reminders for quarterly audits and notifications for contract renewals. So you’ll never get caught unaware.
4. Begin Tracking Your Vendor Performance and Lifecycle
Once your data is organized, you’ll start measuring how your vendors perform against your key metrics. This step helps you turn raw data into insight that continues to save you time, energy, and money. You won’t be reacting to late shipments or poor service anymore. You’ll be able to make predictions and take proactive steps to improve your relationships with your suppliers.
Here’s what you’ll want to track for insight:
- Whether deliveries are on time
- How accurate are orders
- How many orders are completed
- How accurate are invoices
- How competitive are your vendor’s prices
- Whether you pay your invoices on time
- The quality of service and products
- Customer service responsiveness
Alongside these metrics, you’ll want to have benchmarks, so you can see if your vendors are meeting your needs. From there, you can take steps to improve the relationship in regular vendor reviews, as part of an ongoing lifecycle.
And be sure you reward excellence to keep those relationships strong. You can do things like pay high-performing vendors faster. Going forward, evaluate all of your potential new vendors based on how closely they resemble your top performers.
5. Keep Data Out of Silos
Finally, one of the most important steps you can take as you move into a vendor management system is to keep the data out of silos. Perhaps the greatest failure of a paper-based system is that only one or two people in any organization understand it. If they leave, or the paper gets damaged or lost, the whole system falls apart.
Once you go digital, assign responsibility to multiple people from various teams. That way, you won’t have to worry that all of your critical information is locked behind a wall of silence. Instead, you’ll get everyone on the same page, adopting your new system, and discussing key insights and ways to improve.
In the end, it may feel overwhelming to make the shift to vendor data management software, but once you do make that switch, you’ll wonder why you resisted for so long. A well-organized, digital vendor system will keep your records tidy and transform how you run your business on a daily basis.
Choose the right platform and centralize your information with clear processes in place, and you create a foundation for your team. You’ll save money and time and cut way back on errors. This leads to better relationships across the board, which, really, is the whole point, right?
