Supplier management is essential for businesses, yet for many companies it’s done with little structure, and managed manually. The more established the relationship your business has with its suppliers, the more predictable and reliable the supplier behavior—and your business’s overall performance will be more predictable and reliable, too.
What is supplier management?
Suppliers are third-party sellers that provide goods and services to your business, and virtually every business — big or small — has some kind of supply chain in order to make their business work. Supplier management ensures the goods and services you pay for provide the maximum added value to your business. Effective supplier management requires:
- Onboarding of new suppliers — Ensure the proper workflows, information, records, and invoicing are organized and a procedure is established between the buyer and the seller before the relationship begins.
- Communicating needs and terms — Keep your supply chain streamlined and reliable by maintaining open communication with your suppliers for better understanding of each other’s business needs.
- An effective vendor management system— Strategically plan future interactions and needs from your suppliers in order to maximize the effectiveness and value of your goods and services through quality relationships.
The real impact of supplier management
Without supplier management, your business is missing out on key opportunities to improve the predictability and the quality of service you receive from your suppliers. Suppliers have a significant impact on your business’s ability to perform at its best. And because they offer the specific goods and services that organizations need in order to be productive and profitable, they also present a certain amount of risk should they not provide the quality of good or service your business requires to reach key business objectives and quality standards.
When there’s a fault in your supply chain, it affects the overall performance of the business.
With an established supplier management strategy, however, you create a clear policy that lays out how your business engages with and manages its suppliers — and the standards to which you hold them. Doing so sets relevant metrics and measurements against which you can effectively evaluate your suppliers and their performance in a demonstrative way.
When you work together with your suppliers through a collaborative relationship — rather than a transactional one — you can manage some of the risks associated with relying on third party suppliers for key areas of your business.
Without supplier management, your business risks:
- Higher probability of misunderstandings We all know the effects of poor communication: misconstrued information, frustration, and poor performance.
- Lack of visibility over vendors Whether you have a handful of vendors or hundreds, you lack overall visibility and knowledge when information isn’t centrally located.
- Lack of standardization Without centralized payment terms, contracts and other paperwork, you waste time and money reorganizing every deal.
Why should you invest in supplier management?
More security for your business
Businesses with a well organized supplier management strategy can rest assured that their supply chain is more reliable, streamlined, cost effective, and contributes maximum value to their bottom line.
Mutually beneficial support
A strong relationship with your vendors means that not only are your needs made clear, but so are your vendors. Opening communication lines and maintaining a strong rapport with your suppliers helps buyers and sellers support one another better through better understanding of each business’s needs, abilities, and limitations. Supplier management improves reliability — for your business and theirs.
Key benefits of supplier management include:
- Efficiency — Boost business performance and harness the power of your resources to their maximum potential.
- Cost Effectiveness — Streamline your supply chain costs and cut out unnecessary expenses by organizing and measuring supplier performance.
- Quality Control — Improve delivery, reduce waste and re-work, and resolve customer complaints faster with higher standards of quality from suppliers.
- Compliance Standards — Build a more consistent process that responsibly addresses necessary procedures, guidelines, and risk management in every workflow and process.
- Collaboration — Drive value through relationships in which each business’s success benefits both suppliers and buyers.
The future of supplier management solutions
The future is more. More collaboration, more technology, more customization, more optimization. Automation will continue to streamline processes, enhance communications, cut excess time and money, and customize needs—while managing risks.
When companies embark on a “digital transformation” journey, success is often limited. Suppliers often are left out in the cold and yet buyers can’t truly digitize their supply chain without them. A perpetuation of manual processes and paper invoices continues to slow the invoice to pay process, exacerbating an already challenging cash-flow position for your sellers. The overall effect is that it puts the supply chain at risk – one minor disruption creates a knock-on effect to the rest of the supply chain.
It’s time to change that so that helping suppliers to succeed means that buyers succeed as well. When that happens, everyone benefits from going digital – a true win-win for a stronger supply chain. Tradeshift Engage is the only platform that gives suppliers immediate value and instant connectivity to a network of buyers. It’s the only solution that provides suppliers with real value, such as invoice data, payment status and analytics, from first contact. This incentivizes suppliers to quickly onboard to the Tradeshift network, enabling companies to achieve their digitization goals faster. Once buyers and their suppliers are digitally connected, they can collaborate and strengthen their supply chain relationships. This leads to a more adaptable, flexible and resilient supply chain – from day one.
Users choose Tradeshift to help manage their suppliers because of our:
Better data Tradeshift Engage’s analytical capabilities gives sellers a quick dashboard view of payments and transactions. When integrated with Tradeshift network’s data, suppliers will enjoy access to all of their data in one place. This organization leads to fewer inquiries and a more efficient process. Our answers to your questions come faster, are more in-depth, and provide more clarity than anywhere else.
Enhanced collaboration Giving your suppliers a personalized experience right from the start, Tradeshift Engage strengthens communication by storing and consolidating conversation history. Users can easily collaborate on tasks, attach necessary documents, and search for old records, all within our digital platform.
Embrace of digitization The Tradeshift network acts as a digital hub to support and assist with your supply chain needs. Suppliers enjoy access to our powerful digital tools, improving their processes and capitalizing on new opportunities. Plus, when suppliers sign up for Tradeshift Engage, they also gain access to our online payments portal, helping you secure payments more quickly.