Supplier development: the key to long-term purchasing success

Supplier development: the key to long-term purchasing success

Qualified suppliers who know our business perfectly, have the necessary technology, innovate and continuously improve are a source of competitive advantage for every company. It is therefore no surprise that buyers guard their know-how in supplier management like an eye in the head.

Unfortunately, many managers do not realize that a quality supplier panel is usually the result of many years of supplier work and development, and they often approach supplier management recklessly, i.e., unnecessary conflicts, ill-advised supplier changes for "a few crowns," and unsystematic development and management.

We'll focus on the last point, where you can do it via email, Excel and basic functions in your business software, but you can also send orders by mail, enter invoices manually and search for suppliers in the phone book. On the other hand, good practice today is to thoughtfully use SRM (Supplier Relationship Management) modules that offer these functionalities as standard:

(1) The Supplier Portal and Registration Function enables easy registration and efficiently manages information about new (potential) suppliers, facilitating initial communication between buyers and suppliers.

(2) The Supplier Qualification Module provides detailed information about the supplier such as financial health, certifications, machinery and technology, product portfolio, innovation potential, etc. A quality module includes a supplier document management system.

(3) Supplier evaluation based on various criteria that can be collected automatically (certification, quality, complaints, delivery reliability, price development, development programs) or are rated by individual departments and then aggregated into a final grade. Based on the scores, suppliers are then classified into several groups ranging from "black list" to "strategic suppliers."

(4) Supplier Development, which acts as a communication tool that keeps track of the number of open topics at any given time, their current status, whose side the ball is on, contribution.

As always, software is only a tool that is only as good or bad as you use and treat it. Many purchasing departments don't even know they should be actively and strategically managing suppliers, so they see the acquisition of software as a complete waste, extra work, and hide behind the general statement that "we already do all this stuff, more or less." And they hope the CEO or managing director doesn't ask them "so show me how it currently works." On the other hand, companies that recognize the importance of vendor relationship management know that from a certain point on, they can't do it without quality software. Fortunately, there are enough solutions on the market for all budgets and needs, you just have to choose and then really use the module to the company's advantage.

We believe that SRM from Promitea will enable you to innovate and achieve a competitive advantage. Contact us for more information.