Supply chain law, corona, Brexit, etc. - The signs are pointing to a storm and supply chains are becoming increasingly shaky. Companies are trying to react as quickly and flexibly as possible to unpredictable market changes in order to maintain their ability to deliver or produce. But what happens if a key partner is unable to deliver or fails to meet standards? What is the plan B? How can risks in the supply chain be identified at an early stage? Digital supplier management is an important success factor in this context. Find out why in this blog post.
Business processes have changed fundamentally in many places in recent years. Customer requirements have become more dynamic and, above all, more complex. In order to keep pace with these changes and be able to provide goods and services at all times, companies need to intensify and optimize their relationships with their suppliers. After all, cooperation with suppliers is an integral success factor. Supplier management should therefore be given high priority. Long supply chains due to globally distributed production sites have meant that many locations and numerous suppliers have to be brought under one roof. This entails a huge amount of communication and organization. If there is a problem at one point, this can sometimes have an impact lasting months, as the availability of parts affects production and involves complex rescheduling.
Supplier management is part of procurement and refers to the strategic and systematic organization and management of the relationship between supplier and customer. It therefore shapes and directs the general relationship between suppliers and buyers in strategic purchasing with the aim of creating a supplier database and improving relationships and cooperation with suppliers in order to create synergies for performance improvements and cost reductions. Those who optimize the supplier-customer relationship and processes can procure their goods better, faster and more cost-effectively than the competition. Easier said than done, because the larger the company, the larger and therefore more complex the supplier network and thus also the risks.
Good supplier relationships have always been an important prerequisite for a successful purchasing strategy. But what actually constitutes a good relationship with your own suppliers? Essentially, there are three cornerstones:
For many companies, improved collaboration with their suppliers is the key to success. More and more companies are therefore relying on software-based support in the area of supplier management. A well-established and IT-supported supply chain process minimizes risks, improves product quality and increases competitiveness. Companies are also achieving greater resilience in their supply chains and more sustainability through digitalization. The classification, expansion and further development of the supplier base is also important in order to act in a future-oriented manner. In today's world, this is no longer possible without digital assistance.
Among other things, software makes it possible to identify risks in the supply chain at an early stage and act proactively. Acting instead of reacting is the motto here. Unforeseeable events such as the pandemic, the passing of the Supply Chain Act and Brexit have shown how important it is to proactively manage individual suppliers. Companies that had already digitalized their processes were significantly more capable of taking action than those that had not (yet) done so. Effective supplier management ensures overall cost savings, strong long-term partnerships and operational efficiency.
Communication errors can never be completely ruled out - but buyers can minimize the likelihood of failing to reach an agreement with suppliers. Digitalization creates a new level of transparency in processes and makes communication much easier. On a digital platform, several employees and partners of a company on the supplier side have access to all important information. If an employee is absent due to illness or vacation, colleagues can immediately view all the necessary details about the order in question.
Fluctuations and production downtimes can be avoided if companies organize their internal and external networks flexibly. For example, suppliers can be changed at short notice in the event of bottlenecks. Monitoring also plays an important role here, as changes in performance can be detected. Appropriate tools for supplier management offer a high degree of flexibility so that, ideally, an entire network of potential suppliers is available to the purchasing department. The internal exchange of inventory and delivery data can also be handled reliably and error-free.
With digitalization, a new standard is finding its way into companies. The same standardized data is requested from every supplier. This allows buyers to maintain an overview and make better comparisons.
Digitized purchasing intensifies cooperation between the purchasing team and the supplier. Many companies underestimate the impact of a partnership-based relationship with their suppliers. If there is little exchange with suppliers, the sense of togetherness suffers and so does the work. At the same time, suppliers are given a software-supported platform with which they can strengthen their bond with the customer and thus gain a competitive advantage.
If the order quantity, price or delivery date deviate too much from the desired target, a modern system automatically recognizes this. This reliably reveals optimization potential to the purchasing department in real time.
In times of Industry 4.0 and global value chains, it is more important than ever that information is available in real time. This allows supplier risks to be anticipated in good time and solution options to be offered. Communication via email, phone call or fax is no longer up to date and harbors various risks such as transmission errors, a lack of transparency and unexpected orders that catch the purchasing team off guard.
Would you like to find out more? In our free guide to supplier integration, you can find out how to digitize communication between purchasing, suppliers and logistics, why digital purchasing is a decisive competitive advantage and how other companies have already successfully digitized their purchasing.
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