Supplier Management
Mesh Flinders
Senior Writer at Tradeshift
Imagine a world where your suppliers love doing business with you. A world where the level of engagement between a business and its suppliers is high and collaboration is seamless. The right supplier management strategy can get your business there.
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.
Strategic supplier management tactics
- Automating the invoice to pay process to reduce manual support and paper invoices to
- speed up invoice payments to suppliers
- Establishing policies to help organize exchange of goods to be the most cost effective
- Negotiating legal contracts to hold both sides accountable for the success of the relationship
- Setting expectations for the goods and services received, and the way in which they are received
- Writing contracts that meet the needs of both the seller and the buyer
- Aligning on targets and goals to ensure the relationship is mutually beneficial
- Managing relationships with suppliers and monitoring overall supplier performance
- Keeping accurate records and measuring seller performance to ensure the relationship is as effective, efficient, and valuable as possible
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.
The future of supplier management solutions
We’ll show you what Tradeshift can do in a live walk-through.
Request More