How to improve Supplier Relationship Management
If you are a business that purchases goods from a supplier or vendor, which you then use to sell your own products, you will almost definitely know about Supplier Relationship Management. But for those who don't, lets go over the basics: what is Supplier Relationship Management?
Supplier Relationship Management (or SRM) is the practice of interacting and communicating with the third-party suppliers who provide your business with materials, service,and general goods. This used to be a less complicated process, for the most part- the main goal was to choose suppliers who were agreeable and affordable, and not much else was necessary. However, thanks to the growth of the economy and the invention of the Internet, most businesses now have many different suppliers to choose from when it comes to purchasing their goods. It is still necessary to find suppliers who are agreeable and affordable, but there are now more aspects of a supplier that must be considered. Are they a local company, or will they need to get your goods to you from a distance? Are they compatible with your goals as a business, or are you likely to clash? Are they fit for the job of handling and delivering your stock? Do they have a good reputation with others who have used their service?
We also mustn't forget that communication with your supplier doesn't just stop after you start a relationship with them; a healthy effective business-supplier partnership will almost always adhere to a list of needs that must be met. In this article, we're going to be covering some of those needs, on both sides of the coin
Before we do that, however, we need to understand one thing: why is supplier relationship management important in the first place? What are the benefits? What purpose does it serve?
Mutual trust and respect
A large part of SRM involves creating a professional relationship with your supplier that allows a sense of trust to build between you both as business partners. A functioning working relationship with your supplier allows for benefits like new possibilities like working together to improve performance in areas where you may have previously been lacking, freeing up valuable employee time to focus on taks with a higher priority.
Manage supplier risk
To many business owners, supplier risk is considered one of the largest risks that any business must deal with. SRM allows you and your supplier to communicate and plan in advance for risks such as delayed delivery times, issues with quality, or other common problems that affect a business.
Similar to the previous point, having a good relationship with your supplier(s) by communicating effectively reduces the risk of having to pay extra costs for lost, damaged or incorrect goods, or deliveries that did not show up on time.
With these points in mind, here are some of our questions that will help you decide if you have a healthy and well-managed relationship with your supplier(s):
1. Do you communicate with your supplier(s)?
This might be the most important factor of effective SRM- open communication with a supplier mattersbecauseit keeps both sides of the transaction on the same page. If you or your supplier have a problem or concern, even with each other, it is essential that it is addressed clearly and professionally. It is also beneficial for both business and supplier to tell your supplier of any changes in key employees, new or discontinued products,in order tomaintain the mutual trust you have built.
2. Do you make your payments on time?
While it may come across as stating the obvious, it's still a point that's worth bringing up. Be sure topay your supplier on time! In this scenario, it might be easier to pose this question a different way: would you like it if your supplier consistently delivered your goods late? How do you think it would affect the way your run your business? Would you appreciate it?
Like we mentioned earlier, business-supplier relationships are a two-way street. If you look after them, they'll look after you!
3. Does your supplier offer compromiseand flexibility (and do you do the same for them?)
Maybe your supplier isn't able to deliver your stock on a certain day, or you know your next payment to the supplier is going to be a bit late due to unforeseen circumstances. Sometimes, for the benefit of both businesses, compromises must be made and flexibility must be provided. In situations like this, communication is key- so make sure to figure out a solution to your problem by working as a team!
4. Do you see your supplier(s) as an equal or just a vendor?
While you may not consider your supplier a business partner or somebody you should feel invested in, it's essential that you see your supplier as more than just another vendorthat you buy from. Just like your company, your suppliers will have their own goals and targets they want to reach, which you are contributing to by purchasing their service. It's a two-way transaction and should equallybenefit both companies.
5. Are you a good customer overall?
We've already covered open communication and making timely payments, but there are many other factors that relate to being a good customer. For example, do you show your supplier appreciation?Are you grateful when they deliver your goods early rather than on-time, or when they provide your business with excellent service?
It may seem like a small gesture, but most business owners like to know they're doing a good job when they go the extra mile for you- and this could definitely apply to your suppliers. Show them some appreciation for all they do for you. (It mightmake a bigger difference than you think.)
What is an SRM system?
Most of the time, when we mention an SRM 'system', we are referring to asoftware that allows you to track and report on all activity with your suppliers, and helps businesses manage theirtasks by automating them. The main benefit of an SRM system is that it keeps all your supplier data, contact details and other information in one place compared to somewhere you could easily lose it.
Another aspect of this more organised system is the fact that, in some SRM software, communication with suppliers canoften be linked bysomething called a supplier card or tag.Essentially, this means that any message sent to your supplier(s) can be connected to responses, mentions or comments from them and kept in one place, while regularly and automatically updated by the system.
In other SRM systems is the capability to createautomations that are connected to requests for quotations (or RFQs). If your company's stock dips below a certain level, you can use an SRM system to automatically send out RFQs to the relevant suppliers so they can replenish it for you. This benefits you massively if your business cannot regularly check its stock levels due to time constraints, so it might be worth looking for an SRM that does this job specifically.
How can we help?
Zigaflow's SRM stores every task, purchase order or RFQ associated with your supplier in each suppliers' unique records. Our supplier database is quick and effective at keeping your business organised, so you waste less time in the long run looking for the information you need. Not to mention all the added benefits we've already talked about, such as organising your data and automating RFQs!
To find out more about how Zigaflow's SRM could benefit your business (and your supplier!), visit our website and book a demo with us today.