Sourcing and Procurement

The role of advanced technology in supplier relationship management

According to a survey, 57% of respondents spend more time interacting and managing suppliers than they did two years ago. Still, only 56% of procurement teams leverage technology to manage supplier relationships and track their performance, and 65% of procurement leaders have limited or no real-time visibility of suppliers they work with.
Some critical questions that procurement officers and business owners must ask themselves are –

  1. How is the lack of visibility impacting day-to-day operations?
  2. Are procurement and delivery services at par with those of the competitors?
  3. Are there delays in service delivery due to supplier inefficiencies?

If you find yourself seeking answers to one or more of these questions, consider using a supplier relationship management system.

This article explains the importance of supplier relationships, the role of technology, and the typical processes involved.

What is the importance of supplier relationships?

Business owners and Chief Procurement Officers (CPOs) emphasise strong relationships with suppliers that prioritise cooperation and collaboration. Streamlining processes and supply chains and reducing costs are some of the top priorities of procurement professionals.

Meaningful win-win collaborations encourage suppliers to be highly invested in your business’s success. This leads to a higher priority and quality service with competitive costs. Both suppliers and partners may leverage data and analytics to forecast future trends and areas of improvement and measure the success of new initiatives through KPIs.

What are the processes in supplier relationship management?

The main processes in supplier relationship management depend on the nature of your business, but in general, there are these few steps –

Supplier mapping

The first step is to identify the areas within the business that need external suppliers. For example, a textile mill may seek several suppliers of cotton. List the values and mission that should guide you in choosing and managing the partners. Know how they will help you solve the problems you currently face.

Supplier selection

Your selection of suppliers should align with the common goals and can meet existing demands while being cost-effective and different from others. Cost should not be the only parameter to evaluate a supplier. Rather, look at the value addition to the company and the return on investment.

Contract management

Before starting the business, you must list and align with the terms of the contract. Formalise the values, compliances, delivery timelines, rights, duties, and cancellation and contract annulment terms. Proper contract management will help you avoid conflicts in the future.

Supplier integration

Technology will help you integrate the suppliers with the company. They will know the delivery timelines and accept or reject them. Suppliers will also see the best practices and business objectives in real time.

Relationship management

It is crucial to nurture the relationship with the supplier and keep the partnership relevant and expectations aligned through transparent communication channels.

How can technology enhance supplier management?

Technology can help businesses and suppliers generate, visualise, store, and utilise data to measure and optimise their processes.

Another area where technology helps is risk management, policies and frameworks, and regulatory compliance. Studies show that manufacturing and logistics contribute to 20% and 24% of global greenhouse gas emissions. This means who you procure from is crucial. Technology helps you vet the suppliers and regularly measure the environmental impact.

A procurement framework with strong policies that align with regulatory requirements helps automate processes to reduce risk, comply with regulations, and track environmental, social, and governance (ESG) considerations.

Platforms in procurement and supplier management, such as these, can help you standardise, systemise, and automate the process –

  1. Business process management (BPM)
  2. This helps you identify and monitor the supply chain, transfer activities efficiently, and automate processes with the supplier. Track the movement of goods throughout the supply chain, identify the bottlenecks, and improve processes.

  3. Enterprise content management (ECM)
  4. Standardise and supervise supplier documentation, including the terms of the agreement. Monitor these against the actions your suppliers take in service delivery. Enterprise content management also helps you select, evaluate, and collaborate with suppliers efficiently.

  5. Supplier management system
  6. Integrate different business processes, handle a large variety of data, and ensure integrity with a supplier management system. Enhance the quality of communication with suppliers through Electronic Data Interchange (EDI) to exchange documents and reduce lead times and risk.

Technology in supplier relationship management can help achieve effective results, cut waste, and improve the efficiency of the supply chain.

How can Infosys BPM help?

Supplier performance management (SPM), supplier relationship management (SRM), and contract performance management (CPM) technologies at Infosys BPM help you manage KPIs and benchmark performance and compliance.
Read more about supplier relationship management solutions at Infosys BPM.

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