5 easy steps to better Supplier Management

If you work for a large organization, you most likely have tens of thousands of suppliers and any of them, to some extent, can pose a risk to your organization.


Monday, April 6, 2020

If you work for a large organization, you most likely have tens of thousands of suppliers and any of them, to some extent, can pose a risk to your organization.

You and your suppliers are intimately linked and what they do affects you, for better or worse. As a result, you need to be able to monitor, manage and collaborate with your entire supply base, not just strategic partners, more broadly and effectively than ever before.

The benefits that come from proactive, and especially technology-enabled) management of your suppliers and their information are well-documented (CPO Rising - Supplier Performance Management):

  • Improved collaboration internally and externally
  • Lower annual management costs per supplier
  • Better supply incident response
  • Faster supplier on-boarding and time-to-market
  • More efficient sourcing execution

That said, a relatively small portion of large organizations (currently estimated at 22% by Ardent Partners) have a structured, technology-enabled program for supplier management. Why is that? Reasons range from lack of available resources to a poorly articulated value proposition/ROI to plain ignorance. However, recent advances in cloud technology have made effective supplier management much easier than it once was.

Just as with any technology, HOW you use it matters at least as much as WHETHER you use it. To that end, here are Five Easy Ways to Better Manage your Suppliers:

  • Communicate once, reach many
  • Keep all your information in one place
  • Let suppliers manage their own information
  • Integrate with your sourcing and contract efforts
  • Get the information right, and keep it right

1. Communicate once, reach many
The key challenge in effective supplier management at a large organization resides not so much in how you deal with a small number of strategic suppliers. Instead, it is about how to best communicate and collaborate with your larger number of non-strategic suppliers. Critical to this is having an automated system where you can address communications to specific segments of your supply base (e.g. a particular category, those with expiring certificates, etc.) without having to create individual emails. Instead, look for a system that will allow you to target your communications quickly and easily to exactly the group you need.

2. Keep all your information in one place
Perhaps nowhere in supply chain and procurement is it more critical to have easy, centralized access to information. For example, when you have a supply chain incident (think food safety or recall) you need to be able to respond quickly and thoroughly without wasting time on administrative tedium. With segmentations ranging from line-of-business to geography to category, your information will likely be spread across many stakeholders, offices and individual computers. It is imperative that you establish an easy way to aggregate and centralize the information without creating the dreaded "sharedrive-from-hell". To do this, look for two things. First, a system that easily compiles ALL your supplier in one place rather than dispersed across the organization. Second, a platform that is easy enough for all your stakeholders that they will actually use it.

3. Let suppliers manage their own information
If you speak with buyers, one of their key hurdles in the past to good supplier management (especially supplier information management) was the ongoing upkeep of information. Make sure the platform you choose allows suppliers to update their own information (but in a system where it is easy for them to do so). In this way, the responsibility for maintaining current information can rest with those to whom it is most important: the supplier. For example, set alerts and reminders for suppliers whose certifications are expiring so that they are the ones to provide new copies rather than you having to chase them down.

4. Integrate with your sourcing and contract efforts
Suppliers will be more likely to actively participate in your supplier management program if they know that it is integrated with your sourcing and contract management efforts, both now and going forward. By setting expectations during the sourcing process (and via an integrated eSourcing, Contract Management and Supplier Management platform), you can let suppliers know what is expected of them ahead of time. In addition, if suppliers know that you will most likely source again from partners actively engaged in your program, they will be more likely to participate. Even earlier, provide potential suppliers with an easy way to register with your company and provide much of the information you would typically request in an RFI.

5. Get the information right, and keep it right
Nothing defeats "easy" like errors and rework. On the buy side, make sure you have an automated workflow that allows your buying team (and key stakeholders) to approve changes on elements of the supplier-provided information. Above all, do this through an intuitive dashboard that allows the buyer / category manager to quickly see where approvals stand. For sellers, provide them with their own platform where they can keep track of all their contracts and eSourcing events, update their profile, attach files and certificates, receive system reminders, send and receive messages.

By using these tactics, you will be able to improve both the efficiency and effectiveness of your supplier management efforts. All while making it easier for everyone involved.

However, as much as you understand and appreciate the benefits in better supplier management, be sure to use all the resources you can (Spendmatters.com - Supplier Management ROI) when convincing those who hold the purse strings.

For more information on these approaches or to learn more about how Scanmarket can help you achieve your business objectives, please visit us at scanmarket.com