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Procurement vs. Vendor Management: What's the Difference?

Procurement Management

Procurement control is the quit-to-quit technique of obtaining merchandise, supplies, and services. procurement management software is a strategic technique that entails comparing and evaluating charges, negotiating with providers, and awarding contracts. It`s essential to recognize procurement to recognize the scope and depth of procurement control.

Well, procurement`s number one goal is you purchased merchandise and services, store sourcing charges, and force enterprise value. The procurement characteristic has been developed to mitigate dangers and create sustainable provider relationships. Procurement specialists are continuously pursuing value-saving possibilities to lessen constant and billable charges. Procurement specialists look ahead to optimizing value-saving possibilities in licensure fees, support, and protection charges.

Procurement`s critical position is to check current (and potential) seller relationships and make certain the lowest-value company is taken into consideration for supplies. That method that procurement specialists strengthen provider relationships via way of means of comparing and evaluating charges to decide the maximum value-saving possibilities. The procurement characteristic in addition entails consulting with the prison branch to set the perfect phrases and situations to defend the organization`s interests.

While seller procurement is normally involved with value-saving possibilities all through sourcing techniques, the vendor management system nurtures value-saving relationships with providers.

Vendor Management

Vendor control is a strategic characteristic of any organization. This characteristic guarantees that any third-birthday birthday celebration relationships are nurtured and dangers mitigated. Vendor control additionally mitigates dangers withinside the delivery chain techniques via way of means of reinforcing and constructing wholesome relationships with providers. In huge IT companies, responsibility control drives or determines the governance timetable — which means that seller responsibilities have an effect on governance procurement. Certain situations set out withinside the annual overall performance overview timetable observed while carriers fail to meet sure responsibilities.

Vendor Management Best Practices

Best practices permit you to extract the juice out of your relationships with carriers and providers. Using the excellent practices in seller control assists you to accept the excellent providers, mitigate dangers, lessen charges, and revelling in bendy deliver chain situations. There`s no question that seller control is an an increasing number of dynamic and complicated practice.

Vendor control excellent practices encompass:

Vendor control coverage: The control coverage is a professional report that reviews carriers` enterprise and delivers chain sports to the senior control. The coverage can enhance collaboration amongst carriers, foster innovation, and decrease deliver chain dangers.

The vendor contract clarifies responsibilities: The seller settlement is legally binding, and it clarifies seller obligations. The settlement specifies and descriptions some of the situations and expectations. For instance, the seller settlement can also additionally encompass facts approximately merchandise and services, their first-class levels, and the situations round which those merchandise might be delivered.

Use KPIs to evaluate vendor performance: The KPI is a hard and fast of measures that examine providers primarily based totally on delivery and product first-class, value, overall performance, and compliance. The key overall performance signs KPIs used to assess providers take a look at different factors which include value, value, and opportunities for strategic sourcing.

Risk management: Risk control is a component and parcel of seller control's excellent practices. You store your enterprise exceptional deliver chain dangers and make certain most enterprise continuity via way of means of mitigating dangers. Today, recording danger is a number one challenge for companies, and companies are leveraging high-tech improvements to avoid dangers.

Vendor collaboration: Fostering relationships with carriers is the cornerstone of strategic sourcing. Effective procurement encourages seller collaboration to store time, enhance deliver chain efficiency, and mitigate procurement shocks. Encouraging vertical and horizontal collaborations streamlines your procurement making plans and control from inception to completion.

Procurement Management in 2022 and Beyond!

The coronavirus pandemic has affected agencies in exceptional ways. The declaration of the Covid-19 pandemic pressured establishments to shut shops, rendering hundreds of thousands unemployed. The pandemic devastated markets due to procurement and delivery chain shocks.

A stark scarcity of purchaser merchandise became skilled, with shops and fast-meals shops maintaining the harm of a gruelling pandemic. The coronavirus pandemic grew to become tables and marked the start of the latest transformations.

Procurement control has skilled the subsequent transformations:

Data and analytics: Data and analytics shape a critical a part of strategic sourcing and procurement. Procurement specialists are counted on records and delivering chain facts to tell procurement techniques.

Procurement software: Organizations and employers are making an investment exhaustively in procurement software programs to streamline procurement operations. Already, hundreds of establishments are imposing procurement software program to address complicated billing and sourcing techniques.

Supplier relationships: Vendor control is an rising discipline. Vendor control is gaining momentum for companies searching ahead to optimizing seller relationships.

Investment in eProcurement: Electronic procurement (e-procurement) is an revolutionary sourcing model. E-procurement permits companies to leverage automation to energy procurement and sourcing sports. With an e-procurement solution, you could attain excellent-in-class, reliable, and aggressive sourcing techniques.

Spend analysis: The procurement characteristic has modified extensively. This characteristic examines value-saving possibilities via way of means of studying spending throughout product and provider categories. Strategic spend evaluation complements transparency, stopping hidden procurement charges and warding off confusion surrounding bills and settlement phrases.

Sustainable sourcing: Sustainable sourcing integrates environmental, social, and moral obligations in sourcing practices. Organizations exercise sustainable sourcing purchases from providers who meet ethical and social benchmarks. The international stress to lessen manufacturing charges mixed with the globalization of deliver chains has driven companies closer to sustainable sourcing.

Procurement tendencies will preserve to evolve, hence calling for proactive measures in the procurement management system.

Reach Us

ELIT procurement software program affords computerized procurement answers. ELIT sourcing gear permits you to streamline shopping and sourcing techniques, permitting you to take gain of a futurist, contemporary sourcing solution. ELIT`s revolutionary answers qualify you to optimize seller relationships given its seller control capabilities. Contact ELIT and take gain of procurement and seller control.

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Let us handle your stressful strategy planning. With the ELIT Procurement Solution, you won't have to take any pressure. Our Procurement software intelligently strategies every step for you. From making decisions to creating online reports, we have it all covered. Contact Us - http://www.elit.ai/ for a Free Demo

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With broad features ranging from ePurchase to eInvoicing, our Procurement software will aid you with better control of the whole purchasing process. Combined with our RPA/AI integrated services, your first interaction to forging a business relationship is made smarter with ELIT. Contact Us - http://www.elit.ai/ for a Free Demo.

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What is Vendor Management in Procurement?

The Vendor Management Process

Vendor Selection The supplier control procedure starts with a choice of appropriate carriers primarily based totally on what the employer wishes. This consists of sending out requests for quotations and requests for proposals. Besides searching on the rate quoted with the aid of using a supplier, it`s additionally crucial to do not forget their song report and potential to deal with contracts of a selected importance and specifications. Other crucial issues are the seller`s fashion of verbal exchange and culture.

Contract Negotiation

The agreement layout and negotiation are an crucial a part of the vendor management system as it defines the rights and duties of each parties. It wishes to be as specific as viable in order that it affords a manner to remedy any trouble that can rise up for the duration of the existence of the agreement. Sensitive however regularly unnoticed regions in contracts encompass non-disclosure of crucial facts a dealer may also get whilst sporting out the agreement. While such topics may also extend negotiations, it`s higher to cope with them early.

Onboarding of Vendor

This is the needful office work that wishes to be performed earlier than you begin doing commercial enterprise with a supplier. You`ll want to set up verbal exchange methods, touch persons, make sure that the seller has the precise licenses, and acquire their banking and tax facts. Having a supplier portal standardizes the procedure for all carriers, making sure not anything is missed.

Vendor Performance Evaluation

Your employer wishes an goal manner to evaluate supplier overall performance. You want to make sure that there are clauses withinside the agreement that designate in element their duties and the yardsticks for evaluation. Performance wishes to be tracked always from one length to the following in order that it turns into viable to discover traits and justify any corrective moves.

Risk Management

Dealing with more than one carriers calls for regular chance tracking due to the fact their moves can negatively have an effect on the company. For instance, if a supplier is going through regulatory issues, this will have an effect on their capacity to carry out contractual duties. This calls for short contingency making plans to keep away from a disruption of operations. Another situation could be wherein operating with a supplier poses a reputational chance to your commercial enterprise. This may also necessitate the cancellation in their agreement.

Benefits of Proactive Vendor Management

When a commercial enterprise is actively tracking its operating dating with carriers, there are various advantages so as to accrue.

Better Selection

The supplier choice procedure entails locating carriers who meet a hard and fast criterion. This approach that the commercial enterprise will paintings with carriers which have a better probability of appearing in line with expectations. There might be much less churn, which regularly ends in disruptions and high-priced choice processes. In addition, tracking overall performance traits for numerous carriers enables to preserve requirements at a excessive level.

Proper Contract Management

vendor management software entails gaining visibility into all of the contracts a commercial enterprise enters. Contacts are stored in a centralized repository, wherein it`s smooth to retrieve and check with them. The commercial enterprise can preserve carriers responsible even as honoring its very own duties to the carriers.

When a agreement has been observed to the letter, it makes the renegotiation and renewal an awful lot easier. In fact, wholesome agreement control is critical for robust relationships with carriers.

Better Value for Money

When a commercial enterprise takes time to pick out carriers, it’s going to grow to be getting greater fee for its procurement spend. First, carriers can be evaluated in phrases of rate. However, past that, the choice procedure will study the potential of ability carriers in addition to their popularity for first-class. Vendor control entails making strategic selections which includes operating with fewer providers for higher agreement phrases. This can translate to enormous financial savings for the commercial enterprise.

Challenges Experienced in Vendor Management

Despite the nice efforts to make sure carriers carry out as expected, a few demanding situations may also nonetheless rise up. Vendor compliance chance is the probability of a supplier now no longer assembly the overall performance laid out withinside the agreement. Poor first-class items and offerings will in the long run have an effect on your very own first-class. As such, you can want to reduce ties with this sort of dealer and do a brand new choice procedure.

A mission may also rise up whilst you don`t have a principal digital repository to your supplier information. This approach which you have low visibility into your supplier activity. Without a dashboard to song overall performance, you’ll by no means understand whilst overall performance is dipping till possibly it`s too late. To save you this, it`s nice to move for supplier control structures that permit you to acquire critical information and include analytics into critical decision-making.

Invoice bills control is every other not unusualplace mission in supplier-dealer relationships. Often, providers may have unique phrases. A commercial enterprise has to do a fantastic coins control process to make sure it meets all duties as they fall due.

Implementing a Vendor Management Strategy

To craft and put into effect a supplier control method, adherence to sure nice practices is required.

The commercial enterprise wishes an ordinary method that it`s seeking to fulfil. The supplier control method must help the larger method. In addition, there have to be a hard and fast criterion for supplier choice. For this to paintings, the commercial enterprise may also want to set up a supplier control group with illustration from the unique stakeholder departments withinside the commercial enterprise.

vendor management system make the processing of handling carriers loads easier. The commercial enterprise can gain immensely from automating sure tasks, growing a self-carrier portal for carriers, and having a principal area to save contracts. If your commercial enterprise calls for a supplier control system, get in contact with ELIT procurementSoftware. ELIT is the world’s leading provider of procurementSoftware solutions to help businesses manage their P2P activities optimally.

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Creating purchase orders made easy with our collaboration features. We have developed an automated source mapping suite. It is designed for mining data from the initial data collection to the final assignment of generating appropriate purchase orders for the suitable respiratory. Contact Us - http://www.elit.ai/ for a Free Demo.

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Let’s take a look at some of the most common procurement issues and how to Reduce Them

1.Balancing Sourcing

Procurement departments and experts war with reconciling sourcing priorities, specifically in 2022. Procurement faces the venture of reconciling competing pursuits like fees vs. dangers. One catch 22 situation with procurement is: is it really well worth it to supply inexpensive merchandise to distant places and be given the threat of non-transport because of the remote location? Well, this bottleneck maintains to focus on procurement`s finest venture: the want for stable sourcing priorities, specifically regarding dangers.

2. Relying on Small Suppliers

Most organisations are depending on neighbourhood providers, primarily small and medium-sized organisations SMEs. Dependence on small neighbourhood providers is operationally essential, specifically in faraway regions where there's limited entry to business-important resources. The covid-19 pandemic has highlighted loopholes in procurement, displaying that even the slightest surprise can impair the reputedly infallible delivery chains. In 2022, as the arena returns to the brand new norm, SMEs can be in jeopardy. Most SMEs closed stores without delay after the pandemic struck. So, the first-rate venture for procurement is an overreliance on small providers who’re already nursing the effects of the pandemic. The price of resuming operations can be overwhelming. SMEs have to meet operational expenditures: salaries, payments, stock, set-up, and advertising. SMEs have to additionally foot accounting fees like rent, taxes, and write-offs.

3. Lack of Internal Communication

Procurement groups play a vital role. Procurement groups are accountable for buying substances and offerings and making sure healthful negotiations with providers. The procurement feature isn`t linked to any branch. This feature isn`t open to any branch`s data or facts. In addition, spending facts come from one branch and machine. So, it turns difficult to aggregate. So, the procurement branch won`t make powerful budgetary selections without consulting with different departments and stakeholders. Procurement groups supply the satisfactory fee after they paint collaboratively with unique departments. And after they have to get the right of entry to spending facts from discrete systems. Centralizing conversation channels to enhance inner communications and bolster collaborations is an underlining procurement venture. A significant procurement machine that automates procedures and centralized procurement data might clear up this venture.

4. Procurement Bypass

Procurement pass occurs whilst personnel buy items, substances, or merchandise without following procurement methods — and later ahead those payments to the procurement. There`s no question that each corporation revels in a few procurement pass shapes. Those who pass procurement methods pose an expensive venture to the organization. Organizations omit bulk purchases and fail to optimize capacity gives. Indeed, corporations that fail to institute green procurement methods omit price-saving opportunities. Bypassing procurement can cause a lack of price-saving opportunities. In the long-term, it can show dangerous for buyer-seller relationships. Organizations have to look at the motives in the back of procurement passes. When a pass occurs, pick out motives: inefficient procedures, loss of knowledge, resolvable issues, etc.

5. Difficulty Tracking Contracts

The procurement feature is enormously strategic and procedural. Procurement entails negotiating with vendors, organising terms, and final contracts. Procurement contracts may be overwhelming with complicated terms, overlapping schedules, and ranging durations. Some contracts might also additionally want modification and rectification, main to expensive processing fees and prolonged durations.

Deploying an agreement control machine will assist clear up this venture. An agreement control machine is a digitized machine that classifies, stores, and tracks contracts, permitting procurement groups to stay beforehand of agreement procedures. An agreement control machine integrates into the procurement machine. Organizations that use procurement automation revel in agreement control solutions. An agreement control machine gives centralised, secure, and automatic storage. That, in turn, makes procurement green, timely, and streamlined.

6. Managing Inflations

One of procurement`s main demanding situations is coping with inflation. For instance, the United States annual inflation price changed to 6.8% withinside the very last sector of 2021. Predictions display the inflation price will develop further. The effect of world inflation on the Australian financial system is well-documented. The United Kingdom has already hit a 30-yr excessive of a 6% inflation price.

Purchasing During Inflation Affects How You Buy withinside the Following Ways

You spend time negotiating price reductions instead of negotiating for the ‘best’ prices regardless of inflations.

You stockpile to sustain supply and protect profits

You determine discounted cash flow and present values without using current values

You source substitute products and manage demand better

You avoid cost increases by bypassing go-to-market processes

You weigh prices against market risks in remote markets

Organisations must ask themselves whether they can deploy inflationary purchase practices faster and efficiently in 2022.

ELIT procurement software — Overcoming Procurement Challenges

One manner of overcoming procurement management system demanding situations is via way of means of constructing more healthy provider relationships. Organizations need to realign with new stakeholders' wishes to become aware of cost-saving opportunities. Organizations need to use agile and proactive procurement strategies. A vital part of reinforcing procurement in 2022 is the usage of sustainable procurement strategies.

Luckily, with procurement automation answers like ELIT procurement software, organisations can prioritise which delivery chains have more dangers and greater impact. ELIT procurement software presents stop-to-stop visibility into sourcing processes, supporting procurement groups to stay beforehand of the curve of their ordinary procurement processes.

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Need for Artificial intelligence in Procurement

As Procurement leaders plan their 2022 Savings targets, they may be exploring new approaches to release the whole capacity in their operations and understand its genuine fee. In nowadays`s the digitized environment, that genuine fee of Procurement lies in turning into a strategic unit of the firm, which contributes to the direction of boom and innovation.

To allow procurement groups to be greater strategic, companies ought to place AI in the middle of their arsenal and use it to help with forecasting call for trends, optimizing bids for predicted financial savings, calculating dealer ratings primarily based totally on negotiated agreement phrases, tracking price range overall performance, and plenty greater.

Procurement leaders regularly get stuck withinside the hype of AI however groups want to take into account AI as only a software program device that may remedy particular troubles throughout the procurement lifecycle. It enables groups to automate mundane duties and tactics ensuing in boosting productiveness and cost-efficiency.

Beyond productiveness and efficiencies, having state-of-the-art synthetic intelligence (AI) with the aid of using your aspect simply gives an aggressive facet to your organization.

So how does AI assist remedy the procurement puzzle?

let`s undergo a few use cases- Consider yourself as a client with a want of a few workplace resources at your international headquarters; AI can help your sourcing and procurement groups at each touchpoint withinside the procurement lifecycle, simplifying the shopping for procedure withinside the following approaches-

1) AI-Assisted Sourcing

AI can assist perceive what to supply and wherein it has to be sourced from. A software program can don’t forget all of your wishes in phrases of merchandise wished for the workplace resources, any specs for the one's merchandise, after which deliver recommendations on your subsequent pleasant agreement or dealer base to paintings with or control, this may shorten it slow spent on sourcing and assist to make certain you`re getting the pleasant deal feasible. ELIT ProcerementSoftware can analyze your sourcing styles and behaviour making smart dealer guidelines for destiny wishes. \

2 ) AI-powered Auctions & Supplier Performance:

AI can help your crew in eSourcing gadgets and assist with bidding. A software program can region bids on behalf of providers, ship out RFIs or RFPs, and music your project`s overall performance in real-time. AI`s language processing functionality permits it to examine the content material wished then produce proposals dynamically primarily based totally on that statistics. AI even gives insights into what can be advanced upon or how you may keep away from pitfalls which are normally made with the aid of using procurement professionals. This extensively reduces time spent on blunders detection and correction in addition to saving the attempt of all groups.ELIT ProcerementSoftware can empower your sourcing crew with the aid of using studying dealer overall performance-associated statistics together with audits, evaluations, credit score scoring, transport time overall performance, and use it for destiny selections concerning positive providers.

3) AI-powered Spend Analysis & Classification:

AI/ML also can assist classify and interpret masses of billions in transaction statistics, which may be leveraged to useful resource predictive evaluation ensuing in procurement groups taking “smart” selections. AI can assist automate this procedure and revealing your organization`s spending to perceive any irregularities. AI enables real-time spend evaluation and enables lessening the time spent on your company`s procure-to-pay procedure.

4) AI-powered Contract Management:

AI software program monitors, reviews, and extracts insights from contracts that may be used nowadays and withinside the destiny to assist limit dangers and maximising possibilities for financial savings. While you’re centred on ensuring all of your product wishes are met, AI makes it feasible to perceive dangers throughout providers which now no longer simplest results in improved compliance however additionally gives higher perception into dealer overall performance and capacity mitigation techniques or early detection of dealer issues.

5) AI-powered Catalog Management:

Catalogue control isn`t usually clean and there are regularly more than one variation of a product being controlled immediately throughout exclusive catalogues, providers, etc. AI can control those numerous variations speedy with the aid of using locating duplicates, associating gadgets with the suitable catalogues, figuring out new product possibilities, and so on. AI let you reap top of the line catalogue control to lessen prices associated with sourcing applicable merchandise.

6) AI-Powered Invoice Processing

Once you obtain a bill out of your dealer through electronic mail and you then definitely download it onto your device. The subsequent step might be to perceive and extract all of the certain facts. AI can totally automate this procedure with the aid of using allowing automation of bill matching with the aid of using intelligently analyzing and “understanding” the invoices and extracting the pertinent facts together with bill number, dealer name, bill due date, product description, quantities due, and so on. Analysis of essential statistics factors and automatic type of invoices for in addition procedure refinement enables to enhance the accuracy of bill submission main to on-time payments. This can assist seize early charge reductions with higher visibility and bring about giant financial savings possibilities.

Conclusion

AI has a superb capacity to empower procurement software and advantage a unique gain to early adopter groups with the aid of using turning in advanced ROI. The programs of AI in regions of spend type & analytics, and agreement control are taking part in wider attractiveness throughout industries.

ELIT procurement management system has already enabled massive groups to get greater fees from their procurement lifecycle. Progressive groups are evolving into the following paradigm of procurement transformation and AI is at the centre of this evolutionary procedure.

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Are your business ties affected by the epidemic? Stuck with tedious logistic and billing spreadsheets? Our assistance enhances vendors' and consumers' build business relations through our online collaboration. The highly efficient real-time data management system helps you with a flexible logistic and billing system. Contact Us - http://www.elit.ai/ for a Free Demo.

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No integrations process is too complex for you with our ""Multiple Integrations Mode"". The first and only automatic integrations platform that can seamlessly integrate with 400+ APIs. Test the integration on your application. Boost productivity, eliminate chances of errors, and ensure better outcomes with ELIT. Contact Us - http://www.elit.ai/ for a Free Demo.

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Are you tangled in tethering applications with web-based APIs? Now our suit makes it more effortless. We offer an advanced architectural style that allows interaction with RESTful web services. Our REST APIs enable essential business functions such as logging, tracking, updating, analytics, and authentication to be streamlined through technology and remote collaboration. Let us handle you a hassle-free app ecosystem. Contact Us - http://www.elit.ai/ for a Free Demo.

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To generate better returns for your Sourcing events by gaining control over your spends and maximising savings opportunities, Think ELIT. Contact Us - http://www.elit.ai/ for a Free Demo

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The customizable, intuitive sourcing dashboards in ELIT gives you 360-degree visibility of all your sourcing activities and their performance. You will always have quick access to view spend and monitor compliance with preferred suppliers by your organization. Contact Us - http://www.elit.ai/ for a Free Demo.

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ELIT is an all-in-one procurement management software. Our software is easy to use and can be customized to the needs of your business. We support a streamlined procurement workflow that allows you to manage your internal purchase requests as well as your entire supply chain in a single platform. Contact Us - http://www.elit.ai/ for a Free Demo.

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Through our Procurement software, We help to avoid unexpected expenses that cause you to go over budget, it’s important to have clear, streamlined approval workflows in place. Ideally, these workflows can be automated so that the appropriate employee can ensure that each purchase aligns with a company’s financial strategy. Contact Us - http://www.elit.ai/ for a Free Demo.

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E-Procurement the next big thing! With ELIT you get an effective procurement adaptation for your organization in different stages of the buying cycle. Easy interfaces with accurate data analytics help you to leverage the best & to reduce costs for your overall buys. Ensure procurement at lower prices with ELIT. Contact Us - http://www.elit.ai/ for a Free Demo.

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The customizable, intuitive sourcing dashboards in ELIT gives you 360-degree visibility of all your sourcing activities and their performance. You will always have quick access to view spend and monitor compliance with preferred suppliers by your organization. Contact Us - http://www.elit.ai/ for a Free Demo.

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Reduce Supply Chain Risk, Improve Visibility and Collaboration! Request A Free Demo Today! ELIT Makes Supplier Performance Evaluation An Easy Task For Your Bussiness. Contact Us - http://www.elit.ai/ for a Free Demo.