Automating the Vendor Management Process: Benefits at 5 Key Steps

What is vendor management?  

Gartner describes vendor management as “A discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the deal life cycle.” 


The challenge of vendor management 

For large organizations who have an extensive vendor base, and even more so for those with international stakeholders, it’s important to ensure that vendors are properly managed. 

Failure to do so could lead to business disruption, delivery failure, non-sustainable multi-sourcing, and poor value for money, which in turn leads to profit loss.  


Solve the problem with automation  

Automation can be used throughout the vendor management process to benefit both internal and external stakeholders. You should consider these five sub-processes to automate the process end-to-end and deliver benefits such as speed, cost saving and reduced risk of supply chain disruption. Using a single platform to orchestrate these tasks provides a central reference point and ensure visibility across the process to further enhance efficiency.  


1.Vendor selection 

This is typically a lengthy process involving numerous parties, and even more documents. Once you’ve defined your business requirements, you’ll send out requests for quotations (RFQs) and requests for proposals (RFPs). As this information comes in, you’ll need a way to manage and view the documents to make the correct decision in a suitable time frame. 

Automation benefit: Consolidate document management  

Automating vendor selection saves all your RFX documents in a single place and, when integrated with other intelligent technology, can determine which vendors match your requirements. It helps reduce the time spent managing the lengthy, and arguably most important step, of the process, so your employees can get through more RFPs in a shorter space time.  


2.Contract negotiation  

Negotiating a contract can be time consuming. Inevitably, there will be a few back and fourths over email between you and the vendor before you both agree to the terms laid out. It’s important to get these right, or you may face setbacks later on in your relationship.  

Automation benefit: Visibility of status  

Using a process automation platform allows you to manage the contract in one place. Notifications can still be sent out over email, but by automating the process, the email triggers are sent out automatically and the process is tracked through the platform. This means you have complete visibility of the process and know exactly who the contract is currently sitting with. 

Improve your supplier relationships with Bizagi’s Vendor Management Solution.


3.Vendor onboarding 

Onboarding is the opportunity to gather all the information you need from the vendor to ensure they can be paid for the goods and services they will provide. The sooner you get your vendor onboarded, the sooner you can start doing business with them.  

Automation benefit: Faster onboarding and set-up 

Automating your vendor onboarding streamlines the entire process, which decreases the set up time so you can start purchasing sooner, ultimately decreasing your time to market. An added bonus is that when tasks in the process are automated, you can rest assured that you’re meeting all legal and compliance requirements. Nothing will fall through the cracks.  


4. Monitoring performance and managing risk 

It’s vital to monitor service level performance to ensure that all the agreements laid out in your contract are being met. This work is usual highly manual and can be especially time consuming if you have a large vendor base. Automated data gathering integrated with dashboards allow you to have a visual view of the contractual KPIs.  

Automation benefit: Reduce third-party risk  

Having a constant overview of how your vendors are performing reduces the chance of small issues escalating into a huge risk. By monitoring performance, you can ensure that you retain the best vendors, and quickly look to replace those who aren’t meeting your expectations. Automated reminders and alerts to both you and your vendors also help to eliminate delayed payments and benefits the supplier-buyer relationship as you don’t have to write those irksome, repetitive follow up emails.  


5. Payment 

It’s important to ensure your vendors are paid on time in line with your agreed terms. You can automate the approval of vendor requests so that purchase orders are always paid on time, allowing you to take advantage of early payment discounts. The approvals will be automatically triggered to issue payment to the vendors once invoices are received and processed.  

Automation benefit: Visibility reduces fraud & enables discounts  

Automating the payment process means that its easier to spot fake invoices as all invoices from approved vendors will come through your automation platform. The visibility of payment information also helps to predict cashflow which can aid with financing in other areas of the supply chain and take advantage of early payment discounts – money that can be better spent elsewhere in the business.  


Vendor Management Automation in Action  

Deutsche Post DHL Group turned to process automation to optimize its Vendor Master Data Management (MDM) portal. This covers vendor onboarding, monitors their performance and ensure automated payment is correctly executed.  

This process previously relied on time-intensive manual collection and validation of data to fill the gaps between system breaks.  


A portal was created as a centralized access point for 320,000 employees and over a thousand vendors. It uses business rules to automatically validate data upon entry to minimize repetitive review steps. Supplier details were also automatically replicated in the ePurchasing system to save further manual effort. 

Automation eases the process by authenticating external users, checking data for errors, submitting forms, requesting approvals, and duplicating data in the ePurchasing solution. Bizagi ensures that the process is fully compliant and also eliminates the need for an API to connect to their ERP, orchestrating with SAP and automatically handing data over to RPA bots for interpretation. 

“Bizagi is the tool which holds together everything end-to-end and is the go-to portal for our service providers who log into Bizagi to process a case,” said Timo Neff, Team Lead, Automation Designers & Architects at DP DHL Group. 


Transform your vendor management process 

Find out more about how Bizagi can automate the vendor management process from selection to long-term performance monitoring for improved efficiency and better supplier relationships.