Building frictionless relationships with vendors is key to powering up supply chains and ensuring that your small business is as efficient as possible across your network of suppliers. While obtaining a holistic view of these component parts of your operation can be challenging, emerging technology is helping to break down old barriers and silos throughout the industry.
The global vendor management software market size is expected to grow to a value of $12.17 billion by 2028, growing at a CAGR of 10.9% from its $6.5 billion valuation back in 2022. This illustrates the rate of exponential growth the industry will experience over the coming years, uncovering fresh opportunities for small businesses in particular.
But how will the evolution of vendor management software help to improve the supply chains and operations of businesses? Let’s explore five ways that technology is improving how SMBs interact with their vendors:
- Embracing Analytics
The power of analytics can significantly enhance vendor management processes by empowering small businesses to closely analyze the performance of each and every vendor along with their risks and opportunities.
By utilizing advanced analytics tools, it’s possible for SMBs to democratize the vast volumes of structured and unstructured data vendors produce to identify trends, patterns, and anomalies that could impact performance.
For instance, predictive analytics engines could conduct sentiment analysis or advanced forecasting analysis to anticipate issues that could impact inventory levels. If the analysis anticipates an upcoming supply chain disruption, it can offer actionable advice on how to manage suppliers accordingly.
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- Holistic Vendor Management
Technology is also helping to make vendor management software more holistic. With seamless integrations with project management, inventory management, incident management, and financial management processes, more businesses can actively reduce the danger of silos harming internal operations.
The removal of these silos can guard against instances of duplication, helping to ensure that invoice management is as slick as possible without incurring any unwanted expenses.
In gaining a more holistic overview of vendor management software integrations, SMBs can benefit from more focused insights and analytics that can bolster decision-making processes and ensure that businesses can manage their suppliers more closely.
- Streamlined Payouts
Vendors can be complex to manage, and nurturing relationships depends on your slick internal operations.
With this in mind, having a functional vendor portal that can help oversee payouts and international compliance is an essential stepping stone in building operational efficiencies.
With the best AP automation software, it’s possible for small businesses to improve their cash flow with instant advanced vendor payments with the help of advanced financial tools that can enhance liquidity and leverage payments upon the receipt and quality check of vendor goods.
Dedicated vendor portals can also help to manage tax compliance on an international scale, helping businesses to ensure that they keep on the right side of regulators while operating in a fully transparent manner.
- Welcoming AI
The ongoing artificial intelligence boom is already generating use cases in the realm of vendor management, and tools like EY’s Fabric AI Space have provided insights into how multi-vendor management processes can be aided with AI solutions and natural language processing (NLP).
By acting on vendor data flows, the AI model can improve user experience in a way that’s entirely budget-friendly to improve governance and drive long-term value through automation tools.
With the help of end-to-end automation, small businesses can manage vendors autonomously while workforces allocate their time and resources elsewhere. This helps to lower instances of human error in data entry and AI’s ability to work alongside machine learning (ML) technology means that inconsistencies can be quickly identified and addressed for added efficiency.
- Enterprise Content Management
Documentation forms a major part of vendor management, and with Enterprise Content Management (ECM) systems, it’s possible to gain a comprehensive overview of supplier documentation.
This technology helps businesses to keep track of the terms of vendor agreements and monitor them to remain compliant at all times.
With the right ECM tools, small businesses can select, evaluate, and collaborate with global suppliers in a frictionless manner.
In the future, we’re likely to see more generative AI tools revolutionize ECM further, helping to create more nuanced agreement terms and build contracts that can be naturally translated for overseas vendors.
Vendor Interconnectivity
As the world becomes increasingly interconnected, technology is helping small businesses gain unprecedented control over their vendors on an international scale.
Positive, well-managed vendor relationships can pave the way for efficiency within business models and lower operating costs for SMBs. With the emergence of AI and automation technology, decision-makers can enjoy unprecedented control over their vendor relationships while ensuring prompt payments and more conducive partnerships.
By embracing vendor management technology, your SMB can equip itself with the necessary tools to access the best possible vendors and manage them in a way that can outperform rivals and retain tighter control over cash flow.
