How To Get The Best From Suppliers?
How Do You Get The Best From Suppliers?
Suppliers play a crucial role in the success of the majority of businesses, with 70% of the average company’s revenue being spent with third parties. Despite this, some companies end the procurement process when they sign a contract and begin working with a new supplier. Apart from purchasing from them, the only time they engage with the supplier after this is when they have a problem with the supplier.
Active supplier management has many benefits for companies, such as reducing any unnecessary risk through compliance, ensuring they are getting the best value through tracking performance, and building stronger relationships with suppliers.
What is Supplier Management / Vendor Management?
Whenever a company onboards a new supplier, there is an element of risk. Managing supplier risk is a crucial aspect of any business, especially when a supplier is first on boarded.
The success of the many companies depends heavily on their suppliers. The identification of early warning signs, such as poor performance or a reduction in a supplier’s turnover, can assist your company in determining if a supplier has a potential impact on the company’s deliverables.
When a company identifies a potential risk with a supplier, it’s always important to communicate closely with that supplier to discover more details and to manage the potential risk together, especially if it’s a critical supplier.
Reducing Risks
Many different types of risks can be associated with a supplier or supply chain management. A combination of vetting suppliers when on-boarding, compliance checks on an ongoing basis, and monitoring of any associated risks can in most cases eliminate these risks. As a result of this pro-active approach, the company may be able to avoid or at least mitigate risks, which is a clear benefit for the company. Supplier Management Software reduces the risk of supply problems as well as providing insights into supplier evaluation and information.
Supplier Performance Monitoring
It’s not uncommon to have good and possibly some bad experiences with a supplier throughout the course of a contract. Monitoring and maintaining this on a regular basis will ensure that when the contract comes to an end there is a fair and accurate record to reference. In addition, the record can be used in meetings with suppliers to ensure that they are providing the best value.
Supplier Life Cycle Management
Supplier Lifecycle Management (SLM) is a strategic process for managing suppliers. When onboarding a supplier, a company must recognize the value and benefits they can add to their procurement process across the entire project lifecycle. In order to identify potential risks or explore further opportunities, a supplier should be regularly contacted throughout the entire relationship.
What is Supplier Relationship Management (SRM)?
Supplier relationship management (SRM) is the process by which a company optimises their supplier’s performance and develops strategic relationships with them. Each company approaches this differently. This is another critical component of supplier management. However, the overall aim is usually the same: to build a stronger working relationship with the supplier, empowering both parties to deliver better results and to communicate more effectively; this should improve customer service for the company and allow for the supplier to potentially win more long-term contracts.
Supplier management includes this essential and often overlooked component. For a commercial agreement to be successful, both sides should maintain an open relationship and be respectful of one another. It also means that the supplier is more likely to go above and beyond when they are really needed.
Supplier management encompasses all three points above, and is an important component of the procurement process that cannot be ignored.
Conclusion
In large companies, especially those with more resources, this is easily accomplished either by their teams or by using technology. One Supplier Management solution that has been created with SMEs specifically in mind is oboloo. It is an intuitive and simple procurement software that also incorporates Sourcing, Contract, Supplier and Savings management to enable companies to be supplier smart. To learn more please visit www.oboloo.com
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