Benefits of effective supplier management
Now that you have got an idea of the importance of supplier management, now let us see its benefits. There are several benefits for your organization when you have effective supplier management. They are:
Improved agility: When you have a sophisticated supplier management system, you can respond faster to unexpected market opportunities and be updated on new business trends. You can make solid strategic alliances and quickly onboard new suppliers based on their ability and quality. The new suppliers can be managed effortlessly.
Cost savings: Your company can have smooth and frictionless supplier connectivity and collaboration which increases productivity and reduces the cost of operation.
Mitigating risks: Your company will have improved visibility which allows you to eliminate blind spots in transactions and minimize vendor disputes. Any risks can be easily identified in advance, which helps in times of crisis.
Effective supplier collaboration: Digital transactions and human interactions between more than one supplier can conjointly provide the intended product efficiently.
Improved onboarding and relationship management: With an improved system, you can quickly onboard new vendors by assessing their services and validating their past performances. Further, procurement and supply chain activities can be administered from a centralized system.
Supplier Management Solutions
Mainly, there are three types of supplier management solutions: SAS supply chain solutions, Supplier Performance Rating, and Supplier Portfolio Optimization. SAS supply chain solution adopts a customer-centric approach. It enables you to have access to enterprise data, gathers relevant corporate information, forecast sales, and leverage capabilities for effective supplier management. SAS supply chain solutions can be easily customized to meet the supply chain needs of your organization. They can also be integrated and optimized with your web interface for efficient management.
Supplier Performance Rating is a solution that is designed to rate and rank suppliers based on their performance and other criteria simultaneously. It is an automated scoring system that is useful in evaluating your vendors and eliminating any discrepancy in the supplier management system.
Supplier Portfolio optimizer is a solution that is designed to assist the structuring and restructuring of your supplier portfolio with the primary goal of maximizing your company’s benefits as well as meeting market requirements. This solution depends on the vendor data that a company manages in a system and through data optimization, helps you to make smart procurement decisions, and negotiate with vendors. With Supplier Portfolio Optimizer, you can have a simple interface where you can easily access the supplier information such as budgets, demographic details, and other business data.
Supplier Management Solution tools and Software
As said earlier, with the increase in globalization and digitization, the basic structure of the organizations is becoming increasingly complex. Added to this supply chains and vendor management are becoming intricate. Using the right kind of supplier management tools and software can simplify supplier management.
The supplier management solutions consist of different entities, for instance, a document management solution integrated with CAPA (Corrective and Preventive Actions) for managing the quality of the final product and as well as compliance. Having such an integrated system can have a sustainable advantage in taking care of the certifications and maintaining regulation compliance etc. Also, using these supplier management tools, you can easily facilitate supplier inspection and store the data on the cloud securely. In addition to this, you can reduce the communication gap between your company and the suppliers, which will help you in making better decisions regarding sourcing and risk management.
There is a vast array of supplier management software in the market, and you need to choose the one that can be easily customized to your needs and is economical. Some of the top supplier management software used by organizations include:
- Oracle Supply Chain Management
- SAP Ariba
- SourceDay Platform
- Bid Ops
Criteria for selecting the supplier management tool
There are specific criteria based on which you can choose these tools. The requirements are as follows:
Criterion #1: Enabling RFI, RFP, and RFQ – This is an essential criterion for supplier management software to provide you with Requests for quotes, Information, and proposals. This will help you easily streamline the suppliers and compare turnaround times, pricing, quality, and capabilities from several vendors in one go. This feature can also be automated.
Criterion #2: Reverse Auctions – This is another essential criterion where the supplier management tool must provide you with an automated compilation of suitable vendors to be invited for e-auction. This reverse auction is an intuitive feature that helps you with bidding and multiple staged vendor negotiations.
Criterion #3: Contract Management – Having this feature is of prime importance as it helps you to monitor your spending, track supplier performance, and classify and organize contacts easily with improved visibility and centralized control.
Criterion #4: Purchase Requisition – Before the purchase orders are created, the information is sent to suppliers to ensure that all the necessary information is included in the purchase request. Having procurement software can help you easily track and monitor these purchase requests and other services. When you know everything that has been going on in your company, from contracts to expenses, you can improve the company’s efficiency.
Even before the pandemic, the supply chain market started to grow exponentially, and professionals started to invest more and more in futuristic supplier management tools and software. They started to devise supplier management strategies that would help their company to cut down costs, automate their workflows, as well as expand their network. If you look at the pre-pandemic statistics for supply chain management, you can see that only 57% of the companies believed that supplier management gives them a competitive advantage to develop their business. Also, 70% of the companies thought that the supply chain would enhance their customer service by the end of 2020. When the pandemic hit, only 32% of the global companies faced minimal disruptions, and the remaining 68% of retailers managed to adapt to new supply chain strategies. About 12% of the businesses around the world took a heavy blow due to the pandemic. But despite this pandemic, the global supplier management is said to grow at a CAGR of 11.2% from 2020 to 2027.