How Online Procurement Software Improves Supplier Management
Effective supplier management is one of the bedrocks of an efficient supply chain. Every organization, regardless of the service or product it offers, has to procure raw materials from its suppliers who could number from one to, in the cases of manufacturing or pharmaceutical companies, several hundreds or thousands.
Supplier management entails a lot more than just selecting the lowest-priced vendor or the vendor who always delivers on time, though. It is a collaborative process where the supplier and the buyer share information and work together to create lasting relationships to reduce any anomalies or risks that might creep into the supply chain. Effective supplier management ensures that the supply chain has no disruptions or gaps on the supply-side.
So what steps should we take to select the right suppliers? How can we manage our suppliers effectively? And how do technology and online procurement software help?
As mentioned earlier, there is no one model that fits all organizations. First, organizations have to define the criteria for supplier selection and the parameters for supplier performance evaluation depending on their organizational needs and policies. Then they have to identify the tools that they need and streamline the internal approval/procurement flow. Once the process begins, they are to measure and analyze supplier performance to identify their best suppliers. By reiterating and refining, organizations can finally shortlist their best suppliers and tie up long-term contracts to reduce any market volatility or supply-side risk.
Effective day-to-day management of suppliers is a two-way process where lack of information is a major reason for supply chain failure, especially for organizations in industries where the raw material price varies by the day or the week. There is a need for a common platform for both buyers and suppliers where suppliers can modify/update their products and/or price lists which would reflect real-time in the buyer’s database. On the other side, buyers should be able to simplify the approval process so that the lag time between the requisition and purchase order is kept to as little as possible.
And how do technology and online procurement software help with this? Online procurement software helps organizations build a supply catalog and gives them a platform to manage their suppliers effectively. As it is not on the company intranet, suppliers can be given access to the system so that they can keep the information updated at all times. As it is an online solution, they can modify/update information anytime from anywhere and it will be reflected real-time in the procurement system. Buyers can instantly create requisitions and purchase orders which can be sent for immediate approvals.
Procurement management software also comes with an integrated business intelligence/data analytics tool that lets organizations measure their supplier performance. Are the deliveries on time? What is the lead time? Who offers the best quality? Is the supplier reliable and trustworthy? You can answer all these questions and take steps to improve supplier performance.
To know more about a comprehensive online procurement solution that lets you do all this and more, click here.
