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Learn How Your Company Can Benefit from Supplier Management

Leanne Strickler
Published January 30, 2023

Businesses must stay on top of their supply chain to maximize their time and expenses and turn them into profits. For many businesses, an efficient and streamlined relationship with suppliers can make a significant difference when it comes to productivity, profitability, and organization. In this case, supplier management plays a crucial role in their operations. 

But what is supplier management, and how does it benefit business operations? Here’s a comprehensive look into supplier management and how Supplier Gateway can help businesses grow fruitful business relationships with their suppliers. 

What Is Supplier Management?

According to Gartner, supplier management, also known as vendor management,  is a discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the deal life cycle.

Running a business or service requires having the necessary supplies. Unless a business creates everything in-house, it will need to outsource raw materials, products, or services from businesses that provide a steady supply of these materials. Not all suppliers offer the same level of quality when it comes to their products and services, however. 

So what happens if a supplier’s materials do not meet a business’ standards, or what if their suppliers’ operations and level of service doesn’t align with a business’s strategy? This is where supplier management comes in. 

Supplier management allows buyers to strategically monitor supplier performance and relate that performance to the company’s success and future growth. Being able to strategically monitor suppliers . can help determine whether or not a supplier is a suitable fit for a long-term business relationship. 

Types of Supplier Relationships

The relationship between businesses and their suppliers can vary depending on their needs. These include:

Benefits of Supplier Management

Through an efficient supplier management system, businesses can stay on top of their relationships with various suppliers, improve productivity, and minimize the risks that can affect operations because of their suppliers. Some of the benefits include:

Supplier Lifecycle Management

A typical supplier management process includes supplier lifecycle management and typically includes the following:

  1. Qualification: Identifying whether or not a certain supplier meets a buyer’s specific requirements. Only suppliers that fulfill specific requirements should be considered.
  2. Evaluation: Once a supplier has qualified, they should be assessed based on product quality, supply risk, customer reviews, performance, and any other criteria that are important to your company.
  3. Selection: Once the pool of eligible suppliers has been narrowed, a selection is made. The selection process often takes time due to its direct impact on the business. The ultimate goal in supplier selection is to select a supplier that shows maximum potential value and the want to form a long-term strategic relationship.
  4. Onboarding: This step requires collecting necessary information and documents that the company needs in order to have a supplier approved in the system. 
  5. Supplier Performance: Supplier performance management helps buyers monitor suppliers and discover any issues before they become problems. Constantly monitoring supplier value and performance ensures that suppliers are adhering to any contractual obligations.
  6. Identifying Risk: Monitoring suppliers includes Identifying risk. will prevent unexpected events such as a breach of contract, late deliveries, low quality, etc. Risk management is critical and yet the most overlooked.
  7. Supplier Development: Businesses with strong collaborative relationships with their suppliers are more likely to grow faster than those who aren’t. Regularly sending feedback to supplies will help improve the process and manufacturing capabilities.
  8. Supplier Management: Cultivating a mutually beneficial relationship with your suppliers will give you a significant ROI and gain more competitive advantage and innovation, which results in reducing cost, lower risk and higher quality.

Supplier Management and Risk

Companies may be exposed to supplier risks. This could be due to interruptions, issues with the supply chain, and any other undesirable behavior that could affect an organization’s own operations. Risk can be divided into four main categories – each of which can be mitigated through a number of ways, including having a solid supplier management system in place. 

1. Strategic and Financial Risks

A supplier with poor financial health can result in issues such as economic dependency and bankruptcy. This, in turn, can lead to issues down the line for organizations as their vendors do not have the means to fulfill their obligations. Organizations may be able to mitigate this by checking their suppliers’ financial health before partnering with them. 

2. Contractual and Legal Risks

The risk of non-compliance, legal challenges, fraud, and other legal issues that could arise from the partnership. The business could be affected by this through their reputation from associating with their vendor or result in operational delays or lawsuits in case of any legal conflict. 

3. Operational Risks

This is linked to the raw materials, supplies, and other services provided by the supplier. Quality issues or incomplete orders can cause delays or reduce the quality organizations can provide their own customers. This can also lead to operational delays, which could halt production and affect productivity within the organization. 

4. Reputational Risks

If the supplier is linked to scandals or disasters, it could affect the reputation of the organization. There’s also the issue of organizations that stand for certain ethical, social, or environmental issues only to partner with suppliers that don’t follow the same stance. Knowing the reputation of the supplier can mitigate issues like these. 

What Challenges Do Supplier Management Solve?

Through the right supplier management procedures, businesses can overcome a number of challenges that are common when dealing with procurement and supply chain management:

Supplier Risk Management: How Software Can Reduce Risk

Software platforms designed for supplier management can simplify a business’ processes. SupplierGATEWAY’s Enterprise Supplier Master Data Management Platform helps reduce risk and save time in the following areas:

How Does SupplierGATEWAYMinimize Supplier Risk? 

With all-in-one supplier data management software, businesses can keep their suppliers in check using a well-designed platform that houses all  necessary supplier data. Software like SupplierGATEWAY’s Enterprise Supplier Data Management Platformis designed to source suppliers, track productivity and KPIs, and reduce the risk suppliers can have on your business without the added costs. 

Some of the benefits of working with a reliable supplier management platform like SupplierGATEWAY’s include:

Efficient Supplier Information Management Software from Supplier Gateway

Maximize your productivity and procurement costs with the all-in-one platform for your supplier management needs. With Supplier Gateway, you can make your supplier data work for you while minimizing risk and improving your relationships with your suppliers. 

Get in touch with us today to request a demo of our platform.