Financial decision-makers in supply chain companies constantly deal with inefficiencies that lead to higher-than-expected costs. Where are all of those hidden costs coming from?
In fact, a recent study found that 20% of supply chain costs “often go unidentified because of a lack of visibility in supply chains.” Many pieces of the puzzle go into that percentage, but one belongs to vendor management.
The survey found that above-the-market vendor rates significantly contribute to overspending and unnecessary costs. So, it’s clearly time for financial leaders to identify vendor management cost savings. Where do you start?
Starting Point for Vendor Management Cost Savings
To begin with, companies need to identify the most prominent issues contributing to rising vendor management costs in their company, especially when trying to manage many vendors.
Here are three main challenges we have encountered working with companies:
1. Managing purchase order acknowledgments. Acceptance of PO terms and conditions is often mismanaged with a large vendor base, which can quickly become a liability.
2. Obtaining information about whether the material shipped per the expected schedule. A lack of visibility into the who, what, when, where, and why of shipping can lead to chaos. Without proper controls, shippers will send orders at will rather than according to the set schedule and shipping rules.
3. Obtaining the appropriate tracking information for inbound shipments. Does your team know when an order will arrive from a particular vendor? And, did they select the best rate for each shipment to begin with?
Essentially, if your company doesn’t know if, when, or how something shipped, you can’t plan accordingly. Costs will inevitably increase due to a lack of oversight in shipping decisions.
In many cases, you have to stage warehouse personnel, warehouse space, and contractors. All of these areas can cause an increase in costs if they’re not properly coordinated.
- Delays in inbound freight cause the output to be delayed as well.
- Poor management leads to increased freight costs for both the incoming shipment and the outgoing products to end customers.
- More premium shipping methods must be used to meet schedules.
It’s a domino effect where one decision on the front end leads to increased costs throughout the remainder of the process as your team tries to make up for lost time or scrambles to keep the customer happy.
So, what’s the solution to find cost savings with vendor management? Let’s find some answers!
Solution for Vendor Management Cost Savings
The most effective way to manage vendors is by having the right software tool in place. Access to a robust supply chain management platform makes all the difference in the world for financial leaders who need to prevent cost escalation.
The best part is you don’t have to replace your existing software systems. There are tools available that can bolt on to what you already have to give you and your vendors the capability to share information easily and seamlessly.
That’s where we come into play. CloudLogix has a software tool that checks all the boxes to accomplish vendor management objectives. Plus, we back our software with access to a support team of logistics experts. Here’s what we do:
- Make the experience run smoothly for your vendors.
- Look for process improvements to strengthen your vendor relationships.
- Help all parties understand the benefits of adopting better processes.
- Nurture compliance throughout your entire relationship.
Adopting these measures will enable your company to gain the necessary visibility and cost savings. On the vendor side, they’ll also reap payment and relationship benefits. It’s a win-win for you and them.
We even put together a video that captures the advantages of utilizing our solution to save time and money. Take a look at the benefits of working with us to support vendor management.
Interested in learning more about working with our team? Contact us today to schedule a consultation. We can even provide you with a free demo of our CloudLogix platform.
We look forward to helping you realize vendor management cost savings.