5 Ways You Can Benefit from Supplier Relationship Management
Supplier relationship management is more important than ever. Increasing market volatility, uncertain political environments and the impact of climate change are all key reasons why organizations need to better manage their supplier relationships.
In addition, the global pandemic has further increased the importance of supplier relationship management to business success. With COVID-19, CPOs, CFOs, and supply chain executives are further prioritizing supply chain resilience and their ability to operationalize business insights. About one-third of CFOs say supply chain issues are one of their top three concerns related to the COVID-19 outbreak.1
With the global pandemic, meeting volatile consumer demand is causing more struggles and disruptions across supply chains than before. In July 2020, shoppers saw 3x more out-of-stock items compared to the pre-pandemic period. In January 2021, out-of-stock messages were still elevated at 4x pre-pandemic levels. In an Adobe survey of more than 1,000 U.S. consumers, respondents cited that in January 2021, groceries, medical supplies and pet products were out of stock online more often than other product categories.
Why managing supplier relationships is a priority
Most supplier relationship management (SRM) challenges are data-driven. Companies need to be more agile in meeting changing demand, increase flexibility of their supply chains, and get a trusted 360-degree view of their supplier relationships.
It’s only when you have end-to-end insights into your suppliers, product, material or customer data that you can get a better understanding of macro demand trends, enable rapid identification of alternate suppliers, improve collaboration, and automate onboarding for faster time-to-market.
If you don’t manage supplier relationships and information strategically, it can lead to a variety of undesirable outcomes such as wasted resources, lack of business insights, high procurement costs, slow time to market, missed opportunities, negative brand perception or even compliance issues. In short, it can jeopardize the business, not to mention drastically increase your workload.
For example, without a data-driven supplier relationship management solution, onboarding a new supplier can take several weeks instead of days. Or, if you don’t know who your suppliers and sub-suppliers are—and whether they comply with industry and sustainability standards—it may severely impact your business.
Video: Engaging customer and product experiences start with reliable supplier information. With trusted data and a 360-degree view, you improve supply chain visibility, operational efficiencies, and agility for supplier onboarding and time-to-market.
Benefits of supplier relationship management
Here are five ways you can benefit from data-driven supplier relationship management that were heightened by the global pandemic.
1. Improve supplier visibility, agility and decision making
Supplier data is often incomplete, outdated, and fragmented across dozens or even hundreds of systems. For example, your organization may have supply chain management and supplier relationship management software, dozens or hundreds of Enterprise Resource Planning (ERP) tools as well as financial and accounts payable systems across your product lines and regions. Valuable data is hidden in spreadsheets, databases, and remote file stores, each with its own structure and data model. Data — your critically valuable asset — is piling up in each business unit, every procurement team, and all regional offices, often making it impossible to access a consolidated, complete, trusted view of all your suppliers and sub-suppliers. This lack of visibility also makes it extremely difficult, if not impossible, to act quickly in response to shifting market needs and dynamics.
- 65% of procurement leaders have limited or no visibility beyond their tier-1 suppliers. (Deloitte)
- 76% of CFOs agree that without “one version of the truth,” their organization will struggle to meet its business objectives. (Accenture)
More than ever, procurement and finance rely on a trusted 360-degree view of their supply chain across their supplier network. To build supply chain resilience, they need automated workflows that help identify and onboard alternate suppliers quickly. Centralized access improves visibility and increases transparency into your supplier data for a trusted understanding of all relationships and improved supply chain insights and decision-making.
2. Increase supplier data quality to save millions
If your data is incorrect, incomplete, or outdated, not even the best supplier information management solutions can help. In fact, poor supplier data quality can cost millions, in terms of poor business decisions, ineffective operations and logistics, missing procurement information, and significant opportunity cost.
- 93% of CPOs rate cost reduction as a priority for their organization in the next 12 months. (Deloitte)
- 60% of CPOs cite poor master data quality, standardization, and governance as the biggest 5 challenges to procurement. (Deloitte)
Automated data quality checks embedded in your supplier management workflows effectively improve the quality of supplier data while reducing manual workload and costs.
3. Automate supplier onboarding processes to expedite time to market
Using ineffective and inefficient manual processes to manage supplier data is usually accompanied by a lot of redundant workloads, resulting in significantly slower time to market. If it’s taking your business weeks or months to onboard a new supplier, you need to consider the opportunity cost — and lost business.
- 68% of CPOs cite improving and automating procurement processes as a top priority for their organization. (Bain & Company)
- 60% of companies use no tools or are relying on improvised MS Office tools for workflow assignment and supplier relationship management. (Bain & Company)
Automating supplier and product information management workflows reduces the time it takes to onboard new vendors by up to 80% and improves time to market for new products by up to 10x with streamlined and automated supplier onboarding, workflows, and self-service.
4. Embed data governance standards and increase transparency to reduce risk
Supply chain risk factors and uncertainty have increased over the past years. The ability to assess the risk for a specific supplier while also monitoring their compliance or performance is an ongoing pain point for most supply chain executives.
- 93% of CPOs rated risk reduction as a top priority for their organization. (Deloitte)
By making compliance a factor when onboarding new suppliers, you can mitigate supply chain and vendor risk with a 360 degree view that allows you to monitor and reduce supplier risk and access alternate suppliers in case of supply chain disruptions. By fueling all supplier-facing applications, business intelligence tools, and analytics programs with trusted, governed, up-to-date supplier data, your finance, legal, and supplier relationship management teams can more easily monitor and analyze supplier risk and compliance.
5. Increase consumer trust and loyalty with sustainable sourcing and traceability
Another critical factor to remember is how to manage consumer expectations as they make their purchase decisions. Leading brands like Unilever and retailers like PVH are focusing their supply chain and marketing efforts around ecological and social sustainability and traceability, as they see this as an important driver for long-term success. Responsible, transparent sourcing and sustainability will become more and more of a factor when onboarding new suppliers.
- 99% of CEOs believe sustainability will be important to the future success of their business. (Accenture)
- 63% of consumers refuse to buy products and services from companies they do not trust, as supply chain traceability is a key criterion for them. (Accenture)
Gain consumer trust by providing trusted and relevant product, ingredient, and sourcing data to create a unique and seamless brand experience and make compliance, transparency, and sustainability a factor when onboarding and monitoring suppliers.
Learn more about data-driven supplier relationship management
Want to start unlocking the benefits of supplier relationship management? Get the “Unleash the Power of Supplier Data” ebook now.