In 2013, the problem quickly shifted to being one of how to accomplish the vast amounts of work required while making intelligent, consistent, and expert risk management decisions. Because the majority of banks have limited resources and pressures on profitability, it is critical for them to meet the expanded regulatory requirements from FFIEC, OCC, The Fed, FDIC and CFPB using an optimal, efficient process and without adding additional personnel.
1. Protect your competitive advantage.
Vendors represent an essential ingredient for the success of your business. They are fully integrated into your product and delivery strategies. They determine the costs of delivering your products and services and providing maintenance to your customers. Your vendors represent a proprietary design for your supply chain and each element, from your pricing structure, to your contract terms, to your commitments, to your payment terms, to your service levels, enable your business to best compete against your competitors given certain environmental conditions. You want to maintain that leverage.
2. Manage your legal risks.
Vendor relationships are fraught with legal risk, whether a dispute over quality, delivery, or payment terms, or another aspect that is governed contractually. Having good contract management and easy access to your source documents with a vendor – contracts, RFP responses, pricing changes, etc. – is essential to understanding at a given moment or in a crisis what your protections and exposures are. For certain IT vendor relationships, intellectual property or software licensing can emerge as significant issues that need to be managed. A good vendor management program gives you the best visibility into these dynamics.
3. Meet regulatory expectations.
Whether you are a government contractor, are accountable to the FDA, or a financial institution trying to meet the expectations of the Fed, FDIC, OCC or bank examiners, there are certain requirements you must meet. A good vendor management program does this for you. A good vendor risk management program ensures that you monitor and understand what is happening to your vendors on a daily basis and can react accordingly. The best vendor management programs will alert you if your vendors become troubled financially, or are exposed to market or technology risks that may affect you. With a vendor management system like this in place you can prove that you are managing to the expectation of regulating agencies.
4. Improve mergers and acquisitions.
Integrating an acquisition into your company or division can be time consuming and complex. Determining which vendors to keep, which to cultivate and expand your relationship with, and which to throw out can be a significant task and extend the time it takes to fully integrate an acquired company. You need a good contract management system to understand contract penalties, termination dates, and notice periods. Perhaps most important, being organized with a well‐designed vendor management program with contract management software will enable your due diligence team to complete their activities more quickly and with less risk to the outcome of the acquisition transaction.
5. Save money.
Each year, hundreds of millions of dollars are spent unintentionally by companies because contracts automatically renew with vendors, committing the companies to payments for services they do not want or would prefer not to have. Each year, vendors impose price increases that are not monitored, understood, or validated. Get better visibility in your budgeting process each year and use your vendor management program to understand exactly which costs will increase, when, and by how much. This should also be a feature within any good contract management system.
The Vendor Relationship Profile (VRP), Policy Control Module (PCM) and VendorINSIGHT Process (VIP) Expansion Suite introduced in VendorINSIGHT creatively addressed this problem with an “expert guide” to lead bank personnel through the process of classifying vendors according to their inherent risk. This is coupled with an “intelligent due diligence” wizard that guides vendor managers to the proper and necessary due diligence that is aligned with regulatory expectations and with best practices in risk management.
In addition to improving productivity, the modules significantly reduce instances where a bank may inadvertently over-specify due diligence and incur unnecessary time and resources to make vendor decisions or to review vendor relationships. By strictly regulating the vendor profiling classifications and by matching the due diligence requirements to risk management needs, the new suite yields a more consistent outcome with dramatically enhanced compliance.
Need more than just software? Look no further, VendorINSIGHT® leads the industry in customer service. Combine that with our stellar consulting reputation in the field of vendor management and vendor selection and you have a vendor due diligence powerhouse at your disposal.
Give us an assignment to support your vendor selection team or let us update all of your due diligence requirements annually. We will reveal what you often won't discover on your own and all of our documentation will be automatically populated into your VendorINSIGHT® system.
With VendorINSIGHT®, you get custom analysis, insight, completed due diligence questionnaires and information that illuminate risk factors so your decisions are sound, reliable and as risk-free as possible.
View a demo of the VendorINSIGHT system and you’ll see why more than 100 bank and bank affiliates are using the VendorINSIGHT system to run their vendor management process!