The benefits of supplier relationship management
Improve supplier performance
Regularly reviewing your suppliers’ performance will ensure your business is getting the best value from the relationship. The foundation for performance monitoring is your contracted Service Level Agreements and KPIs, which identify exactly what you expect from your suppliers. Suppliers are more likely to execute their contractual obligations if you habitually review their performance. Holding regular meetings improves communication and can flag up issues early so you can take preventative measures to reduce the impact on your business. SRM software will schedule reminders for meetings and periodic risk reviews to help you maintain your supplier relationships.
Enhances supplier communication
Regular contact with your suppliers helps them to get to know your business and improve the service they provide. A free exchange of information and ideas will benefit your customers as it can help you resolve issues quickly. Supplier involvement can often boost innovation as they view problems through a different lens and can offer different solutions. Providing a central communication channel, such as an online portal, reduces missed or miscommunication issues. Details of communications and documentation relating to the supplier relationship are held centrally in the portal and can be referred to at any time.
Increases operational efficiencies
SRM can improve your team's productivity. Automating routine tasks leaves less room for error, and your employees can concentrate on more complex tasks. Holding all your supplier information in one place will save you time as it will be easily accessible when you need it. Having a list of pre-approved suppliers can improve efficiency and save your employees' time. The approval process for buying goods from these suppliers is much shorter as they have already been through your due diligence process.
As you build a relationship with a supplier, they will gain a greater understanding of your business and meet your needs more effectively. And, if issues arise, they’ll be more likely to resolve them quickly if you have a good relationship with them.
Strengthens risk management
Your SRM will help you manage risk on a day-to-day basis. You can create a risk profile, using criteria specific to your business, for example, IT security or compliance with regulatory requirements. Your risk profile will then trigger reminders for actions to be taken and set out the approval process for supplier management workflow. You'll also be able to segment your suppliers so you can easily identify high-risk contracts and manage them effectively.
