- Automates the entire process: A closed loop VMS links together all aspects of the process from vendor management and sourcing all the way through payments distribution. This greatly speeds up the entire process; the fewer manual touch points, the fewer potential bottlenecks.
- Eliminates the resource drain: An VMS that has separate modules for sourcing, contract management, time and expense billing, and invoicing requires additional inefficient processes, such as "three-way matching"; manually matching invoices with purchase orders, payments, and receiving reports. A closed loop VMS saves the organization resources by having all of the key processes automatically flow from one to the next, eliminated manual auditing processes.
- Ensures accuracy: A closed loop VMS greatly reduces the margin for error throughout the vendor process by fully integrating the entire process from order to payments. No step in the process allows for extraneous information to be entered (unlike some VMSs that might allow a supplier to input the rate during the invoicing process). Clients benefit from knowing that every nickel on an invoice can be tracked backwards through the process to a fully approved time bill that was entered from a valid contract, that came from a valid and complete proposal, which was in response to an approved requisition or order.
- Allows for greater integration: Because a closed loop VMS provides a higher level of transnational and data integrity, it is easier to integrate into other systems such as accounts payables and even banking treasury management systems, further speeding up the process, especially in payments distribution
When organizations implement a Vendor Management Solution (VMS) that is little more than cobbled together point solutions, they're often left with "islands of automation" that create inefficiencies and confusion. On the other hand, a closed loop VMS is one where all functionality is fully integrated and where the process, transactions, and data move seamlessly from one end to the other. What's so advantageous about a closed loop VMS? Here are the top four benefits of this approach: