Rome wasn’t Built in a Day, Neither was your Supplier RelationshipSRM
Supply chains are complex and varied; to manage them effectively, you need to understand exactly what’s happening in both your supply chain and your customers’ end markets. A company’s supply chain is a key source of competitive advantage and Supply Chain Management (SCM) is designed to allow a company to monitor its suppliers and utilize the available resources to improve performance. Reviewing pandemic responses and strategies, some CPOs and Procurement teams managed a bit better than their peers as uncertainty and change mounted. These teams were able to quickly communicate and negotiate with their key suppliers to establish a “supplier of choice” solution.
But most sourcing and procurement teams need to pivot and modify the way they handle SCM decisions. How can you create a more efficient supply chain and gain a better understanding of overall performance?
Let’s address why having the right supplier information and supplier relationships is a must.
Global supply chain shortages unveiled a critical need for effective supplier relations. In a market where production capacity has been saturated by exponential demand, product suppliers now have the upperhand.
For many Procurement departments, they learned about this selective elimination the hard way. Now, customers who are more strategic with negotiated rates are given preferential treatment. Conversely, some Procurement departments have discovered that non-strategic suppliers, or even tier two suppliers, offer them innovative solutions to alleviate the shortage.
Learning from Supplier Relationships
Supplier Relationship Management (SRM) is not limited to transactional information (number of purchase orders, number of catalog items, number of supplier invoices ) or legal/contractual requirements. A more effective approach to supplier management and business partnering is to understand the nature of the relationship and dedicate your time to making inroads with suppliers.
Do you really know what your Suppliers do?
Gartner, in its 4-Step Framework to Implement an Effective Supplier Relationship Management Program, stated that managing supplier relations on your tier 1 list is crucial. Learn to manage and control your suppliers to improve your purchasing efficiency and expand your supplier base.
Why is Supplier Information so important?
Supplier data can give your procurement team valuable information to make future cost and time-saving decisions. Further, organizations need to maintain accurate supplier information to fuel all procurement activities and processes. This crucial data will give your team the tools to enact effective collaboration on critical issues–such as risk mitigation, performance improvement, corrective actions and innovation programs. Every business must have a SRM system and a thoroughly vetted process.
Customers get a simple, effective, and robust solution for onboarding, segmenting, and qualifying all suppliers in a manner tailored to the goods and/or services in question. Ivalua provides a dedicated, intuitive, and free supplier portal that can be the single place for comprehensive supplier profiles, including basic company and contact information to credentials and certifications, financial information, reviews and much more. Users can leverage a robust workflow with the necessary tools to segment suppliers for review and approval with subject matter experts and ensure changes and updates to existing records are completed through an effective and auditable change management process. SIM helps eliminate the inaccuracy and process inefficiencies related to supplier information and enables organizations to improve the effectiveness of other source-to-pay processes.
Supplier Relationships Made to Last
It is not just about the product or service. It is about enriching the interactions with the suppliers. According to Ardent Partners, 22% of your AP Team’s time is spent dealing with supplier queries. Fortunately, there are multiple solutions on the market designed to improve effective SRM. Today, leading Procurement teams are leveraging digital procurement tools like supplier portals–where suppliers can self-serve to free up resources. The tools can also assist in the build-out of supplier diversity programs to enrich supplier enablement and future strategic planning.
SRM software is an automated marketing, procurement, and supplier management solution that helps you gather, manage, and analyze information to make faster, clearer, and more informed business decisions. Throughout the supplier’s lifecycle (tender, contract, goods receiving, annual review etc.), the information is centralized from different sources, both internal (ordering system, stakeholders) and external (supplier, administrations, financial, environmental or risk analysis platforms).
To offer such a large range of information, your SRM software should integrate into a complete Source-to-Pay system and connect easily to numerous external information systems. Keep valuable information stored during the tender phase and to re-use it to enrich the SRM. Tenders are an under-utilized source of information and they contain valuable products and service information . SRM software helps to analyze this information and even allows for innovative perspectives into this analysis. Ivalua offers a whole new view of the subcontracting supply chain that lets you identify subcontractors who present the highest level of risk in just a click.
Finally, SRM software helps to enrich the supplier relationships through real supplier collaboration and supplier innovation processes. Of course, you need to be aware that the whole company is involved in supplier relations: The Procurement team is responsible for the process and managing it, and business stakeholders are equally responsible for the success of SRM programs.
Finally, successful supplier collaboration relies on supplier benefits. Utilizing a unique tool that brings together Procurement, business stakeholders, and suppliers around key processes and shared information lets you speak a common language to further facilitate collaboration and innovation. Ideas are retained, refined, shared, and transformed into services or products with real added value. SRM t solutions also allow the user to properly end a supplier relationship when necessary for the organization.
Rethinking SRM for procurement involves:
- Managing a wider spectrum of suppliers,
- Better-value information on these suppliers,
- Increased Interactions
Ivalua’s software unlocks the value-added supplier relationship management universe. It’s not just a few disparate tools that don’t work together–it’s an integrated software suite that lets you do it all. Get a grip on their supplier relationships, improve your supplier management and, in turn, your own operations.