At least 30% of companies function with outdated vendor data, leaving them exposed to third-party fraud. Good vendor data management is essential to protect your organization.
What is vendor data management? What are its benefits and how can you implement it in your company? Keep reading to find out and download our latest white paper about data management.
What is vendor data management?
Vendor data management or vendor master data management (MDM for short) are the same thing. They refer to the framework and solutions used by organizations to manage all data related to their suppliers and their vendor process.
All this info is also called supplier master data, or master file. It usually includes these types of data:
- Goods or services provided,
- Contact details,
- Bank account numbers and other payment methods,
- Contract management,
- Regulatory compliance,
- Purchase history and records,
- Any other data relevant to your vendor process.
MDM relates both to your suppliers and your procurement processes, such as sourcing, negotiations, onboarding, payment, and reporting.
Vendor data management is simply the act of managing all this data. But it’s only simple in theory, as companies deal with a huge quantity of suppliers’ data from various data sources, making it a tedious process.
That’s why MDM solutions exist. With the digitalization of procurement, vendor data management now refers to the tools and software used in the process.
What are the advantages of vendor data management
An efficient enterprise data management process drastically improves your company’s safety and efficiency. While small businesses might start by doing this manually, this process isn’t great for scalability. Larger businesses have to use vendor data management software to keep things running smoothly.
Let’s take a closer look at all the benefits of vendor data management solutions:
Streamlined business processes
Using data management software for your suppliers makes your business processes more efficient. It saves you from having to juggle between various documents and past emails to find the relevant vendor data.
Having all your supplier’s data compiled into one platform ensures there is a single source of truth. As data synchronizes automatically, there is no more worrying about keeping your spreadsheet up-to-date (it somehow never is), or having to double-check against human errors.
Centralizing your vendor data into one location prevents silos and makes it easier for financial managers, procurement officers, and data managers to access reliable data in real time. Your time is freed up for strategic sourcing.
It streamlines your procurement and your financial processes. It also facilitates reporting, intuitively presenting your vendor analytics. Let your vendor software do the data processing to create visualizations and dashboards — all with high data quality!
Managers can leverage this heightened visibility to make data-driven decision-making and gain a competitive advantage.
Improved supplier relationship
Keeping your master file organized and up-to-date is very important to keep your company running seamlessly. Any error, misspelling, or oversight could lead to problems down the line with your suppliers, creating unnecessary delays and stress for all parties involved.
Fortunately, vendor data management tools make your processes more efficient. There are fewer errors and delays which could hinder your supplier relationship. Your vendors are paid on time, and your contract terms are respected.
A VDM system improves your overall communication with your suppliers. Many solutions, like Trustpair, work as SaaS (software as a service) and are cloud-based, making it possible to collaborate securely.
You and your merchants can share and store the all necessary data on the platform, easily sharing updates and changes. From onboarding to contract renewal, VDM helps with streamlining your contract lifecycle management.
Better Data management
Because all data relating to your vendors are in one repository, it makes it easier to stay organized — and compliant:
- Supplier master data management allows you to get rid of unstructured data while managing employees’ data access.
- There are no data silos, so your data is always up-to-date.
- Data management and governance is a moving target, so you need to stay agile. Having a single source of truth means all parties are aware of the changes made to remain compliant.
- Vendor software helps simplify meeting the legal and regulatory standards that apply to your supply chain.
- Solutions mitigate risks associated with supplier management: you can store a copy of all interactions with your suppliers (including purchase orders), leaving an audit trail.
Improved safety
Financial fraud happens more than you’d think. In 2022, 56% of US companies were targeted by at least 1 fraud attempt.
Business Email Compromises (BEC) often use your suppliers as a gateway into your system:
- In vendor fraud, the perpetrator impersonates one of your suppliers to get you to transfer funds to their own bank account. For example, they’ll send an email asking to change their bank account information for future payments. Without realizing it, you’ll send the funds for your suppliers’ invoices to criminals — that’s not good for you, nor for your supplier relationship.
- In invoice fraud, hackers send bogus invoices while pretending to be your suppliers and get paid for goods or services never rendered. It can be months before you or your supplier even realizes it, and the money will be long gone by then.
The good news is: improved workflows mean improved safety! Having all your vendor data stored in one secure place makes it harder for hackers to access. Indeed, VDM usually have high security standards and certifications, securing your procurement process from end-to-end. Using vendor data management lowers your risk of financial fraud, like third-party fraud:
- Cybercriminals cannot change your master file by hacking into your system, your supplier’s network, or compromising an employee’s email.
- Fraudsters cannot use fake invoices, or fake supplier information, to trick you into sending them money.
Using a vendor data management platform like Trustpair makes wire transfer scams impossible! Our solution does automatic checks of your vendor information in real-time, so you always make payments to the right accounts.
As data management software gives you a global overview of your vendors, it also reduces internal fraud risks. Now you know why, let’s look into how to implement an efficient vendor data management system in your organization.
5 steps to set up efficient vendor data management
1. Define your scope
Before jumping into action, take a moment to gather the relevant actors across your company to establish your needs:
- What vendor data do you need to gather?
- What regulations do you need to comply with?
- Who will have access to your vendor data file?
- How are your business needs going to evolve in the next 2 years?
Having the answer to these questions will help you choose the right software and processes and save you time (and money) down the line.
2. Choose your vendor data management software
It’s time to source your vendor data management software! Look at various options on the market and choose the best to suit your needs.
Consider various criteria like cost, implementations, but also integration within your existing tech ecosystem. Trustpair for example integrates natively with ERPs like SAP, and CRMs, and can be connected to a variety of tools through our API. That means all your data synchronizes seamlessly across your various platforms.
3. Set up workflows
Once you have the tools in place, you need to define your workflows and processes for data entry and update. For instance, you might want to consider automating your vendor onboarding for even more accuracy and efficiency.
You’ll also need business rules on how the data is used and who has access to it to meet your relevant data compliance laws.
4. Train your employees
Adoption is key for every software, and vendor data management is no exception. Your employees need to be onboarded onto the new platform and taught your new business processes. They should know who to turn to in case of questions or if they detect any problems (like a fraudulent transaction).
5. Monitor your vendor file
Once your new vendor system is set up, you’ll need to periodically review both your vendor data and your processes for continuous improvement. That ensures accuracy and efficiency, and that you always meet your safety and compliance requirements.
Trustpair automatically enriches your vendor data for you, so you always have access to the most accurate vendor information without needing to spend time on it.
Our software automatically identifies erroneous or obsolete vendor information and blocks suspicious transactions from going through. We also send you alerts if there are changes in your vendor master files. Using Trustpair means completely securing your vendor management, while having a 360-degree overview of your vendor data. We’ve already helped 200 clients completely eradicate the risk of fraud. Contact an expert to learn more!
Key Takeaways:
- Master data management solutions streamline your processes, allowing better decision-making. It also helps you remain compliant.
- Trustpair is the best vendor management platform, auditing your third-party information in real-time so you’re protected against fraud.
