Supplier management: how can technology help?

Supplier management: how can technology help?

Do you have problems managing your company’s suppliers? See how to do it in 4 steps and what technology to use for it.

Supplier management improves the entire supply chain through standardized actions and strategic relationships.

Although this issue is not always among the priorities of a brand, supplier management can be a business differential and is a very relevant strategy.

Parallel to commercial actions, the management of purchases and suppliers is essential so that products and services reach customers within the agreed deadlines.

If you still don’t know how to do it in your company, keep reading this article. You will discover what supplier management is and how to carry it out, what are the benefits of systematized management and how technological platforms improve work.

What is supplier management?

Supplier Relationship Management (SRM) is a business approach that includes the management of a company’s supplier base.

It goes through the phases of identification, acquisition and management of a product, service or other resource necessary to manage the organization and offer quality solutions to the final consumer.

The manager responsible for this area must supervise all the activities of the supply chain. This means knowing the demands of the business, identifying and defining good suppliers and controlling the associations established in each project.

4 stages in supplier management

Good management of purchases and suppliers ensures many benefits for the company (see below). To achieve more quality in this management , the following 4 steps are very important:

1. Planning

As in other types of management, it is essential to structure good strategic planning.

Before choosing a supplier, it is necessary to evaluate the available budget , the demands of the project in question, the activities that will be carried out internally and those that will be outsourced, as well as the supplier’s contribution.

Before you start trading, define the minimum and maximum values ​​to close a deal.

It is in the planning phase where managers define the bases that will guide the relationship with the supplier. Therefore, it is important to be calm and analyze all the criteria carefully.

2. Definition of deadlines and other relationship policies

The entire company – not just the directors – must follow the internal policies for contracting and dealing with suppliers. Therefore, they must be clearly defined and understood throughout the organization.

As the different positions usually deal with acquisition, employees must know, even indirectly, from the beginning the specifics of a hiring. For example: the obligation for the supplier to have a legal checking account, even if he is an individual microentrepreneur, or the obligation to provide certain documentation.

In this way, the processes are carried out correctly , without bottlenecks in the middle of the way.

3. Survey of qualified suppliers

After planning and defining the relationship policies, it is time to find suppliers with the qualities desired by the company.

Do a good market study, consult providers who have already served other business partners and do not hesitate to ask for directions.

In addition to the criteria defined above, it is important that the company works on the training of suppliers , ensuring that they clearly understand the business objectives and how the solution offered should contribute to the overall performance.

4. Monitoring

Finally, the management of the relationship with suppliers must be subject to continuous monitoring to guarantee the improvement of deliveries.

Assess whether performance is meeting targets , what the return on investment (ROI) is, and what bottlenecks remain to be resolved.

Thus, the relationship has continuous improvement, ensuring increasingly significant contributions to business performance.

Benefits of supplier management

Adopting a supplier management system and better organizing this relationship is a very beneficial strategy.

SRM is a concept from the 1980s that examines how vendors influence a company’s risks and rewards. Since then, many benefits have been realized and have become increasingly important , including:

  • Mitigation of failures: working without any kind of standard increases the chances of error. The systematization of supplier management creates quality standards, which significantly reduces failures, especially when there is a technological support system.
  • Cost reduction: supplier management helps eliminate problems such as production losses, inventory shortages and the lack of products to deliver to the consumer. This helps reduce costs, as all stages run smoothly.
  • More efficient contracting processes: as there are stages to comply with, the entire process of contracting/acquiring suppliers and resources becomes more agile and efficient, with positive impacts in all areas of the organization.
  • Robust supply chain: A robust and consolidated supply chain adds more value to the company’s solutions, as deadlines are forecast more assertively and production is optimized, improving performance as a whole.
    Also read: how to do business management more efficiently.

Tips to improve supplier management

In addition to the 4 stages of supplier management already mentioned in this article, other valuable tips contribute to continuous improvement in the management of these business relationships. These are:

  1. Always check the legal situation of the supplier and investigate the image aspects that may interfere in any way with your brand. Internet and other clients of the provider are important references.
  2. Schedule a technical visit before hiring and carefully read each line of the proposal before closing a deal.
  3. With your chosen provider, remember to draw up a detailed contract that clarifies all responsibilities and
  4. expectations.t also evaluates management automation technologies, which will facilitate processes and guarantee more efficiency in supply chain management .

How can technology help

The advancement of technologies is also improving the quality of supplier management.

Through automation platforms it is possible to standardize and systematize all procurement and management processes , making the routine much simpler and faster.

A supplier management system can integrate different areas of the company, manage a series of data and cross information from different tools (such as e-commerce and inventory, for example) to optimize sales processes.

With a BPM ( Business Process Management ) system it is possible to automate processes, control bottlenecks and transfer activities more efficiently.

With an ECM ( Enterprise Content Management ) it is possible to control all the documentation with the supplier and all the actions carried out by him.

Finally, through automation, the company reduces waste, increases efficiency and professionalizes all business management, achieving more satisfactory results and standing out from the competition.

In our blog you can see how an integrated management system works and how you can improve the management of suppliers and other areas of the company.