Vendor Management Software in 2024: Top Vendors & Features

A healthy supply chain is an overriding concern for many businesses. According to IBM, 87% of CSCOs report that it is difficult to predict and proactively manage disruptions, and less than 10% of supply chain data is efficiently used with traditional techniques.¹

When supply chain resilience is considered, managing different vendors at the same time can become a complex task. So, businesses are increasingly moving towards automatized and digitized ways of dealing with multi-vendors, by leveraging vendor management software. The predicted growth of the vendor management software market share from 2021 to 2026 is USD 4.06 billion at a progressing CAGR of 12.27%.²

Figure 1. Prediction of the VMS market’s direction over 2026 (Source: Technavio)

In this article, we will investigate 9 features and criteria of Vendor Management Solutions (VMS) and present the top 7 vendors in the market.

7 Key Features of VMS

Audit Trail (AT)

An audit trail is used to track changes and view date/time records during a multilevel process. Thus, it is crucial for supply chain procedures. It provides recorded evidence of the series of activities, related to a specific event, operation, or procedure. 

Audit trails are generally based on the records of data and financial transactions, as well as communications between relevant individuals. A VMS which has the feature of an audit trail thus enables the transparency of the whole supply chain process. With this feature, it is easier to minimize supply chain disruptions. 

There is an increasing switch to blockchain-based software to ease audit trailing. For a detailed view of how blockchain is used in the supply chain, you can check our article on the advantages of blockchain technology in supply chain management.

Compliance Management (CM)

With the compliance management feature, non-compliance to policies in services, products, supplier behavior, and processes can be tracked and managed. This feature is important to ensure that the business adheres to legal regulations, which otherwise is extremely harmful for the business in the long run both legally and financially. 

According to a survey by the Risk Management Association, 50% of respondents reported that between 6% and 10% of their income is spent on compliance costs. A VMS that has the compliance management feature can minimize potential compliance risks caused by vendors.

Offboarding (O)

A VMS that implements the offboarding feature enables the closing out of customers by reviewing contract completion, finalizing payments, and ensuring terms and compliance have been met. This is especially useful for businesses working with multi-vendors, as onboarding and offboarding processes of different vendors may overlap and make things complicated to deal with.

Performance Metrics (PM)

It is also crucial to keep track of how the business with vendors is performing. There are both manual and digital ways of measuring supply chain performance by key performance indicators (KPI). By the performance metrics feature of a VMS, the success of organizations, divisions, projects etc. can be monitored efficiently and automatically.

Sourcing Management (SM)

Finding the right vendor is not always easy. Vendor sourcing process can give rise to frauds like bribing or bid rigging if not monitored. VMS that offers the sourcing management feature can negotiate best prices and help selecting the vendor that suits the financial planning of the business. 

Transaction History (TH)

One of the most important elements of vendor management is the history of transactions. A transaction history encompasses all vital financial and organizational information such as purchases, payments, orders, etc. A plus of this ability is the prevention of various potential vendor frauds. So, it is crucial to have a solid and up-to-date transaction history between the business and the vendors.

Vendor Payment (VP)

It is a benefit of a VMS program if it facilitates vendor payments. In such VMS, if the invoice details match the purchase order details, the vendor payment feature will make the payment to the vendor automatically. For more detailed information, you can check our articles on payment automation and invoice automation.

Other Criteria for VMS Selection

Deployments (D)

Depending on the nature and the needs of the business, deployment options of a VMS can be another criterion for optimum software selection. Most of the contemporary VMSs operate on cloud-based web services. Some may additionally offer desktop configuration and/or mobile service. However, no deployment option is superior to others. Which option you should select should depend on the business preferences.

Ideal Business Size (IBS)

VMS selection is fairly relevant to the size of your business. The target and scope of different VMSs relate to the maximum efficiency that can be attained. The ideal business sizes of VMSs can be classified as small, medium, and large.

Top 7 Vendors

Given these 9 criteria of a VMS selection, we can list top 7 vendors in terms of their performance in meeting these expectations.

For More on Supply Chain Performance

• 5 Ways to Improve Supplier Relationship Management
• 3 Ways to Improve Supply Chain Collaboration
• Top 5 AI Use Cases for Supply Chain Optimization
• Blockchain in Supply Chain: Advantages & Top Use Cases

If you have questions or looking for advice on VMS, feel free to reach out:

External Links

• 1. “IBM Supply Chain Insights with Watson.” IBM, https://www.ibm.com/downloads/cas/YLEKOE53. Accessed 4 December 2022.
• 2. “Vendor Management Software Market by End-user, Deployment, and Geography – Forecast and Analysis 2022-2026.” Technavio, https://www.technavio.com/report/vendor-management-software-market-industry-analysis&nowebp. Accessed 4 December 2022.