Supplier management: what is it and how can it impact your business?

What is supplier management?

Supplier management is an important process in the procurement area, which aims to ensure control and the best conditions related to businesses’ supply sources.

A good relationship between businesses and their suppliers has become more and more significant, thus making business more competitive and promoting company growth.

Possible problems involving partnerships can affect the company and cause great damage, such as shortages, harm to an organization’s image and irreversible financial impact.

For this reason, supplier management means more than negotiating prices and looking for partners who offer lower costs. There are several elements that must be taken into account when closing a deal.

Price, quality, delivery time, compliance with legal and technical requirements, and ESG issues are some of the aspects that can impact your business, both in a positive and negative way.

See below the key gains of supplier management for your company.

Supplier management: how can it impact your business?

The choice of inputs has a direct influence on the product that will be offered to the customer and on the experience with the brand. Therefore, quality is a fundamental aspect to be considered when selecting partners for your company.

In addition to quality, supplier management also ensures availability and compliance with delivery deadlines.

As a golden rule, you must know your supplier closely and make efforts to strengthen this relationship, in order to extract the best from the partnership, with unique conditions, greater savings, product quality and timely deliveries, among other benefits.

Then technology becomes vital to manage all processes and ensure a sustainable partnership between companies.

Key benefits of the supplier management platform

Implementing a supplier management platform helps procurement teams work with more intelligence, strategy, assertiveness and compliance.

The professionals can eliminate manual and decentralized processes, and achieve what they need to raise the supply area to a strategic position.

The area can be a real protagonist in organizations, but it will need technology as a support. See the key benefits below:

1. Savings

Supplier management helps to reduce procurement costs and achieve savings. After all, we know that $1 saved on procurement means $1 of profit in the company.

2. Agility

Once operational processes are automated and information is consolidated in a supplier management solution, the professionals gain productivity and achieve a strategic focus.

3. Governance

With a supplier management platform, you can check if partners comply with regulations and standards, and if they can honor their financial commitments, among other associated risks that can negatively impact a business.

4. Collaboration

Having an effective communication with your partners is key to streamline procurement processes. Therefore, besides concentrating interactions on a single platform, you can keep your supplier information always up to date and monitor their performance.

Strategies that help you better manage your suppliers

Worldwide procurement challenges and potential supply disruptions have made the relationship with suppliers more important than ever.

We’ve selected five strategies that can help you better manage your business partnerships, particularly in uncertain scenarios:

1. Consider your suppliers as partners

Suppliers can help customers increase efficiency, decrease costs, and drive innovation.

2. Assure long-term agreements

Long-term agreements promote a deeper relationship and guarantee supply even in challenging external scenarios.

3. Create a BSC (Balanced Scorecard)

Setting clear expectations for suppliers helps you regularly track supply performance.

4. Develop contractual clauses

The correct contractual clauses are very important in cases of legal disputes or unforeseen circumstances.

5. Evaluate your supplier base on a regular basis

Procurement teams must frequently evaluate their supplier bases, taking into account business priorities, in order to better manage key spending items.

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