Tag: Supplier relationship management benefits

supplier relationship management

Unraveling Supplier Relationship Management Benefits in the Supply Chain

With the increasing preference for outsourcing non-core competencies, organizations have started to realize that they are becoming increasingly reliant on suppliers. They rely on suppliers in terms of innovative power, security of supply, corporate social responsibility, and on-going cost savings. However, many organizations still fail to realize the true importance of supplier relationship management (SRM), leading to functional incompetencies. Through this blog, we have covered the key supplier relationship management benefits that companies could reap by understanding the real importance of supplier relationship management.

Developing strategic partnerships with suppliers requires a critical analysis of various factors. Request a free demo to know how our experts can provide real-time insights to analyze all such factors.

Importance of Supplier Relationship Management

Supplier relationship management helps align businesses appropriately with suppliers. It focuses on what is critically important for businesses and helps them develop a supplier relationship management framework to collaborate with suppliers.  Supplier relationship management is a systematic approach for developing and managing partnerships that are focused on joint growth and value creation. Additionally, it helps companies to better associate with the limited number of key suppliers based on trust, open communication, and empathy to achieve supplier relationship management benefits.

Supplier Relationship Management Benefits

Improves efficiency

This one of the major supplier relationship management benefits that companies aim to achieve. Improving relationships with suppliers helps companies to address delays in the supply chain process. Suppliers also gain a better understanding of the business they are collaborating with; thus, boosting efficiency.

Minimizes cost

Engaging with new suppliers involves significant costs. By better understanding supplier relationship management benefits, companies can easily eliminate many of these costs. Building mutually beneficial relationship with key suppliers helps companies to minimize costs, reduce delays, and quality issues. Furthermore, it helps identify cost savings opportunities in the supply chain and the quality of supplier output; thus, improving the consumer services they offer.

Want to know how improving relationship with suppliers can help companies to reduce excess costs?

Request a free proposal and access our complete portfolio of supplier management solutions.

Drives greater value

One of the key supplier relationship management benefits is its ability to help companies gain detailed insights into the lifecycle of suppliers and analyze their performance. This helps them identify key areas of improvement and devise strategies to drive greater value from their existing suppliers. Continuous process improvements through long-term relationships with suppliers helps in the creation of a more effective and efficient supply chain.

Mitigates supplier risks

Mitigating supplier risks is one of the unequivocally critical supplier relationship management benefits that businesses need to achieve to sustain themselves in the long term. With the growth of organizations, supply chains and the resultant supplier relations becomes complex; thus, increasing the likelihood of detrimental supplier risks. In such a scenario, understanding the importance of supplier management enables companies to identify and assess the impact of supplier risks and proactively devise risk mitigation strategies. To gain detailed insights, request more information here!

Supplier Relationship Management Benefits: Steps to Achieve True Efficiency

There is a growing realization among companies that they have not been able to fully understand the importance of supplier relationship management. As a result, they miss out on opportunities to improve their offerings. Also, to help companies move from realization to action, we suggest that they take a transformational approach, which considers the value potential, complexity, number of stakeholders, and organizational impact. Although, establishing an effective supplier relationship management process is difficult, businesses can start by building a supplier management framework. Typical activities that will help companies to reap supplier relationship management benefits include:

  • Analyze current supplier management programs, including strengths and improvement opportunities.
  • Formulate strategies to streamline SRM initiatives with business objectives.
  • Creating business cases to calculate/estimate the ROI.
  • Selecting a pilot project with key suppliers of the company.

Improving relationships with suppliers requires companies to analyze suppliers and imitate various strategies. Get in touch with our experts to know how our experts can help you gain a better understanding of your suppliers.

Supplier management solutions

Why Investing in Supplier Relationship Management is a Bankable Idea?

Businesses often tend to ignore one thing: supplier relationship management. They focus on fostering customer loyalty and ignore the fact that establishing relationships with suppliers and managing them is equally important. In fact, the rise in the number of suppliers and increasing complexity of supply chains is making supplier relationship management even more crucial.

However, companies have now realized that the supplier relationship management is imperative to develop bilateral, trust-based relationships with key strategic suppliers to reduce supply risk, decrease long-term costs, and develop more efficient procure-to-pay and supply management processes. This is compelling companies to leverage the benefits of the supplier management program and systematically manage interactions with key strategic suppliers while maximizing the value of those interactions for their procurement organizations. In this blog, we have compiled a list of benefits that companies should look to achieve through supplier relationship management.

Effective supplier relationship management increases profitability and drives efficiencies for businesses. Want to know how? Request a free demo to improve your supplier relationship management now!

Supplier relationship management benefits

Optimizes procurement process

Many times, the turnaround time between registration of requirement and the delivery of the goods and services is invariably long. The major reason behind this delay is the time spent by the procurement department in handling the request for quotation (RFQ) processing. The preparation and issue of RFQ’s followed by quotation processing, shortlisting and negotiations can be a sluggish and drawn-out process. Continual ‘one off’ RFQ processing represents ‘death by a thousand cuts’ for the procurement department leads to significant delays in delivering the requirements of businesses. Time spent in supplier relationship management is represented in the company’s e-catalogs that reduces the number of RFQ situations and speeds delivery schedules dramatically.

Another issue pertaining to the procurement cycle is the time taken for requisition approval. Managers involved in the requisition release hardly have any time to look into the operational IT systems. Requisitions wait unnecessarily in e-commerce/ ERP systems for the budget holder to sign-on and release them. In such cases, the visibility of the full supply chain becomes a critical piece of equipment. Implementing supplier relationship management strategies addresses the  ‘visibility’ issues efficiently in such situations.

Reduces the number of strategic suppliers

Establishing effective governance is vital to unlocking supplier relationship management value.  It requires alignment within the organization and setting up of internal governance processes with ownership of supplier relationships. Since the ownership of the relationship can lie outside the procurement organization, it is essential to involve the right suppliers from the business in the process. Companies can track operational measures mutually agreed with tier 1 suppliers through supplier relationship management governance and can concentrate on a limited number of strategic suppliers.

Want to know how reducing the number of suppliers can lead to strategic sourcing?

Request a free proposal and utilize our services on supplier relationship management.

Improves supplier performance

Although establishing strong contract relationships and ensuring buyer and supplier compliance to those agreements is one part of delivering value, yet it can distract businesses from the ultimate value created from a supplier relationship management.  Value from a supplier relationship comes through innovative and collaborative activities that focus on solving customer problems. This primarily involves sharing of plans between the two entities and jointly defining initiatives that can create long-term value for both organizations through supplier relationship management, such as:

  • Innovative business plans, aligning supplier’s creative efforts to business needs.
  • New market penetration, leveraging strengths and knowledge of both organizations.

Consolidates the supply chain

As supplier’s and buyer’s business work in collaboration,  understanding the inner workings of each other becomes easy through a supplier relationship management process. It helps both parties to adapt their own working practices and operations to better accommodate the other and improve their operational efficiency. The consolidated supply chain further allows the buyers to reduce the number of suppliers they purchase from and streamlines the purchasing process thus making the scope for financial improvements.

Maximizes the usage of inventory

As a result of recent upstream sector trends,  inventory management has started facing several challenges. The transfer of stocks between companies due to mergers and acquisitions is leading to poor visibility and compelling companies to externally procure materials when stocks of material are actually available. Supplier relationship management addresses these issues by automatically determining appropriate sourcing strategies using catalogs and integrating them with a back-end system that is capable of handling the separation of stocks.

SpendEdge’s advantage

SpendEdge’s strategies enable businesses to consolidate suppliers within specific supply markets and reduce purchasing and supplier management costs while increasing the efficiency of their procurement process. It analyzes various parameters including equity interests, sales volumes, technology base, manufacturing, and distribution capabilities, and helps companies make better purchasing decisions by improving the supplier relationship management.

Wondering how we can help your organization? Get in touch with our experts to improve your supplier relationship management.

Request free proposal