Anymore, enterprise businesses rely on vendor partners who provide more than ancillary products. These vendor relationships have evolved into essential partnerships, contributing technology or goods that support a business enterprise. Businesses may have anywhere from dozens to hundreds of vendor partners.
While these strategic partnerships have ample benefits, they require careful management to track data and stay in touch. Historically, that process has been managed via spreadsheets. In the future, it will be managed by a new technology called Vendor Relationship Management, or VRM.
What is VRM?
Vendor Relationship Management is akin to the well-known Customer Relationship Management (CRM), which is software used by sales or marketing departments to track and convert new customers. VRM was first imagined by Brandon Card, who has a history of leadership in the tech sphere, including stints at Microsoft, IBM and Oracle.
He kept hearing first-hand from CIOs, financial officers, chief procurement leaders and buyers about the outdated, manual and inefficient ways vendor contracts and relationships were managed. Coming from a background in sales, he instantly envisioned a CRM-like system wherein business leaders could easily understand the vendor relationship from a contract perspective, instantly see how much they owned/where it was, know all of the people from the vendor team and how to get in touch with them, and ultimately track the ecosystem of vendor data.
With enterprise businesses spending billions of dollars a year in tech services, developing a better plan was mission critical. Card had immediate buy-in and support for his idea, and partnering with additional sales and technical team members, began ideation in 2018. In February 2020, Terzo was launched as the first-ever VRM platform, and it's game-changing.
Relationship-Centric Business Operations
The demand for transparency has never been greater, and running a relationship-centric business operation where communication is clear, data is on-demand and silos are diminished is a high priority for global businesses. Streamlining operations is the only way to survive in steeply competitive markets, and having the latest greatest tech is often only achievable through third-party vendors. These vendors aren't negligible, either. Their products contribute to core functions of a company, even differentiators a company couldn't survive without.
Because of the vital nature of these relationships, a change is overdue. Rather than viewing vendors as mere suppliers (although they are), companies are coming to see them as strategic partners. These partnerships require communication, timely responses, the aforementioned transparency: in short, better relationships. For those relationships to be managed, a VRM is essential.
Historically, companies have operated with minimal understanding of vendors, finding it almost impossible to quickly access contract or contact info. That won't stand when a single product glitch or software patch could upend operations. Because this mutual dependency has become so prevalent, strengthening the vendor relationship is more important than ever.
Businesses and vendors need each other, which also means they need open lines of communication and two-way exchanges on a regular basis. As any sales department can attest, the only way to achieve this is through a finely tuned CRM. Now, the procurement department has the VRM to do the same.
Pioneering New Supplier Management Methods
This foray into a more elite approach to managing vendor relationships directly relates to how companies treat their customers or end users. The cascading effect of strong business-supplier relationships has an impact on what consumers experience everyday, which is a revenue-relevant consideration.
VRMs have the power to break silos, optimize investments and unlock innovation, a tri-fold outcome that businesses of the future need. Strengthening internal relationships transforms external ones. The tech at work to make it possible is impressive.
For instance, the VRM developed by Terzo has a dashboard called Vendor 360° for visualizing the entire vendor relationship. It can integrate data across entire enterprise systems, deliver aggregate data and insights and improve accountability to maximize the value of supplier relationships.
The system is also built to leverage smart contracts, which in this context means proactively managing contracts and renewals, visualizing multi-year commitments for negotiations and tapping the power of AI to get to key data faster and with greater clarity.
VRM for a More Intelligent Business
Business intelligence is a hot ticket item in today's markets. The idea of having on-demand information that clarifies focus during seasons of strategic decision-making is an appealing one. To truly unlock this level of insight, businesses have to uplevel operations on every front. VRM is the next step for most, equipping internal teams to refine processes for managing strategic partners and generate serious results.