Vendor Management Systems (VMSs) is software designed to make operations and management of vendors easier and more efficient.
Vendor management is no easy task. Goals, contracts, monitoring, and terms all have to be considered. Your vendors - processors, subprocessors, suppliers, retailers &, etc. - have to be vetted, onboarded, deal with purchase orders, data transfers, and the list goes on.
Vendor Management Systems exist precisely because of the complex and extensive nature of dealing with vendors.
For short, Vendor Management Systems (VMSs) is software designed to make operations and management of vendors easier and more efficient. Most VMSs are specialized and focus on an aspect of handling vendors, i.e., the process of acquiring and onboarding vendors or on risk management or vendor compliance.
Vendor Management software usually includes solutions for finding and auditing or vetting vendors, managing contracts, ordering and purchasing operations, and risk management.
While not all companies have suppliers, manufacturers, or physical goods, we can almost certainly say that all companies have vendors that process their data.
Data processors and subprocessors are those types of vendors to whom you willingly transfer data to. You also allow them to process it while you retain control over the data.
These include accountants, communication platforms, such as Slack and Google, website platforms such as Amazon or WordPress, and many other similar tools necessary for daily operations.
Today an essential part of Vendor Management systems is vendor compliance. This includes tracking if and how your potential vendors ensure they are compliant with General Data Protection Regulations (better known as GDPR), ePrivacy Directive, and similar legislation.
Vendor compliance management includes managing various aspects of your company and your vendor’s compliance with legal and technical measures ensuring data protection.
Vendor vetting plays a vital role in managing vendor compliance. It refers to the process of auditing and accessing your vendors. In other words, companies that pride themselves in being GDPR compliant must know what their vendors are up to.
Vetting vendors should happen regularly since keeping your information and documentation up to date is essential to ensure compliance. Spotting an insufficient measure of your vendors can save you from receiving fines and a bad reputation.
A variety of VMSs exists, each focusing on a different aspect of vendor management. This makes perfect sense if we consider the needs of an agricultural company and a SaaS startup. Vendor compliance management is only one area of focus, but the recent rise in interest among customers, investors, and authorities has made it prominent.
However, gathering this information is merely part of the process. Equally important is keeping the information updated. The continuous process of updating vendors’ information is essential to staying compliant.
And though it sounds unpleasant to spend valuable time and resources on such tasks, knowing whether sufficient technical measures have been taken to protect your data will protect you from much more unpleasant situations.
Keeping information up-to-date happens on one hand because your vendors, just like any other company, are evolving and changing. On the other hand, it happens because laws and regulations around data privacy are also evolving - keeping track of it will keep you on top of GDPR.
DPAs are a legal requirement, but they also serve to protect you. The up-to-date detailed information about you and your vendors’ privacy efforts can serve as the basis of a well-written DPA. Just like the information, the DPAs should be updated accordingly.
These contracts between you and your vendors are necessary when personal data is being transferred and processed by a third party.
Every company is different, and the best VMS for you and your company depends on your needs. It is impossible to say with certainty what aspect of vendors you should get under control without knowing your business.
But it is a fact that most service providers and SaaS platforms have vendors that are primarily processors and subprocessors (not a lot of suppliers, manufacturers, etc.).
So data privacy and security should be on the top of the list. Fast-growing companies can quickly end up in a situation where they control vast amounts of data, yet they do not have their security under control. Knowing you have compliant vendors becomes essential in such cases.
It is never too soon to get a compliance solution for your company. Even small and one-person businesses will benefit from ensuring their GDPR compliance.
Firstly, because customers are increasingly interested in their data privacy. Secondly, because investors and the authorities are as well.
When it comes to vetting vendors’ compliance efforts, young startups often survive months with less than ten vendors. Hence Vendor Management Systems are not necessarily their top priority. But for companies that have to manage more vendors year by year, vendor compliance will quickly become an eminent issue.
Ultimately, vendor compliance tools should be a must for scaleups and medium to large companies. However, it is never too soon to get your GDPR in order.
Get an overview of what you need to know about your vendors and their GDPR efforts to ensure your customers data privacy.
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