Vendor Communication

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08 min read.

Vendors play a crucial role in the success or failure of any organisation. They must be managed effectively to avoid any supply chain disruptions. For this, effective vendor communication is essential.

Meaning of vendor communication

Vendor communication is exchanging information between the buyer/anchor and the vendor. It is a plan to provide clear and informed direction to its suppliers regarding its requirements. It involves sending purchase orders, debit notes, credit notes, enquiries regarding various products and services, creating contracts, etc. Vendor communication can be done through various ways such as verbal communication, written contracts, vendor portal solutions, orders, telephonic communications, etc. Communication plays a key role in building strong relationships between a company and its vendors.

Why is vendor communication essential for businesses?

Vendor communication is an essential part of the procurement process of an organisation. Higher vendor satisfaction has a positive impact on your business. Here are some of the benefits of goods vendor communication:

  1. It helps to timely resolve issues arising during the normal course of business. Thus, it helps in avoiding supply chain disruptions.
  2. Continuous communication helps to build trust and, at the same time, helps to keep vendor and customer expectations aligned.
  3. It helps reduce the time, risk, and staffing involved in the daily handling of vendors. Instead of spending your resources on resolving vendor problems, a company should focus on best vendor communication practices to avoid issues with vendors. 

Some of the challenges faced during the vendor communication process and best practices to be followed during vendor communication are discussed in detail in the below topics.

Modes of vendor communication and the best choice

Below are some of the commonly used modes of vendor communication:

  1. Vendor portals: Vendor portals allow you to connect with your suppliers via the internet. You can track your orders, raise queries and communicate with the vendors on the vendor portal. It facilitates automated onboarding, creating and tracking purchase orders, product information management, real-time communication, standardisation of procurement processes, etc. This ultimately helps build relationships with the vendors. Suppliers can also see & view real-time statuses on their invoice movement through vendor portals.
  2. Email: Email enables you to send messages to your vendors worldwide in seconds. It helps you to handle orders, billing, contracts, etc. An important benefit of email is automated message handling. It can process incoming and outgoing messages automatically. It can send automatic replies to inquiries by sending confirmations. Also, messages, reminders and routine statements can be sent without human intervention.
  3. Verbal communications: Verbal communications can be by way of face to face communications, telephonic communications, zoom meetings, etc. It is a quick mode of communication and thus saves a lot of time. However, it has no legal validity and therefore may result in problematic situations in future. 
  4. Use live chatting options: One can also use live chatting options to resolve queries instantly. But, this method is helpful for secondary communications and not for new vendors. 

Best practices in vendor communication

Below are some of the best practices to be followed while communicating with vendors:

  1. Use Vendor Portal: A vendor portal is a software solution used by many organisations that network with suppliers to streamline their procurement process online. A vendor portal provides a secure network to communicate with the suppliers in a safe and secure online environment. It automates time-consuming manual tasks involved in supplier management, thereby improving efficiency. It also facilitates automated notifications and reminders which need to be sent to the supplier at different stages of the procurement process.
  2. Make an informed and straight talk: Before talking to the vendors, a company must first gain correct information about the product or services it wants. This helps to set clear expectations between both parties. Also, one must use polite and straightforward language while communicating with vendors. Setting the right tone for communication has a huge impact on future negotiations.
  3. Respond to the vendor calls and emails: One must give a prompt response to the vendor calls and emails to build strong vendor relationships. A timely response to the vendor query helps to avoid future inconsistencies.
  4. Give recognition: While communicating with vendors, let them know how their products helped the company achieve its goals. Be specific about what went well. An affirmative response allows them to serve you better.
  5. Keep the communication simple and precise: A concise and straightforward way of communication helps better understand the situation and helps in informed decision making. Also, try to keep the conversations recorded or written for future reference.
  6. Avoid oral communication: Try to avoid oral communications as they cannot be retained. Thus, it becomes difficult to hold a person responsible for mistakes or inaccuracies.

How does the Vendor Portal help in effective communication?

A vendor portal enables the automation of processes and thus helps in the reduction of time involved in various administrative tasks involved in supplier management. Here are a few of how the vendor portal helps in effective vendor communication:

  1. Facilitates self-service options: It provides self-service options that allow suppliers to log in and view their orders, send invoices, check real-time updates, and respond to customer queries. This reduces the time consumed over phone calls and sending emails related to the receipt of invoices and the status of payments. 
  2. Automatic notifications: The vendor portal helps set up automated notifications for specific invoice collection dates. It can also be used to broadcast messages to one or multiple suppliers at a time.
  3. Facilitates direct updates: The vendor portal enables the buyer to update its information on the portal without getting in touch with the supplier. For example, the buyer can update contract details via the vendor portal. This is an important feature that helps to streamline lengthy administrative processes.
  4. Enhanced sharing: The vendor portal facilitates key information access to both the buyer and the supplier. Having quick access to key information enables companies to make informed decisions. In addition, these portals allow you to make direct requests for information from suppliers and securely retain such information. Thus, confidential information such as review and contract renewal can be directly handled via a secure portal.

The use of a vendor portal allows you to build successful long term relationships with your vendors by ensuring businesses have full control over their data, onboarding and supplier management processes.

Challenges in vendor communication and how to overcome

Let us discuss some of the challenges faced during vendor communication and ways to overcome them:

  • Choosing the correct mode of communication: If the vendor does not prefer your mode of communication, you will lose your precious time and build inconsistencies with the vendor. 

So, one must focus on the communication mode which best suits the vendor. This will help you to achieve a quick turnaround on a project. 

  • Setting clear expectations: Setting up clear expectations during vendor communication is a challenge many companies face. There may be a gap between what the customer expects and what the vendor provides.

The use of a simple yet precise language for communication helps the vendors to understand the buyer’s expectations and thereby helps both parties to achieve their goals. Defining the buyer’s expectations is essential during the vetting process and future transactions.

  • Access to internal data: Many times, during vendor communication, crucial internal data gets leaked. This could put your organisation at risk of data security and privacy.

Thus, during vendor communications, a company must provide a brand guide as a reference to its expectations. Utmost care should be taken that sensitive internal data is not shared with outside vendors.

  • Keeping track of email communications: When communication happens over emails, it becomes difficult to keep track of them. It becomes tedious to search for an email if a vendor reverts to an email. On the other hand, vendor portals streamline the transactions through automated processes and thus help in the reduction of administrative tasks.
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