7 Supplier Management Best Practices

  • Entrepreneur
  • Posted by: Admin
  • Mar 19, 2018
  • Reading Time: 5 minutes

 

Supply chain management is a crucial part in the processes of any large enterprise. Managing a global supply chain can be a daunting task. A hassle free flow of information between two parties is the foundation of an effective business relationship. It is important to consider each facet of supplier management chain to derive greater value throughout the sourcing process.

Many organizations encounter difficulties in developing, implementing and operating partnerships.

Here are the key issues the suppliers encounter:

  • Too much focus on costs instead of value
  • Incompatible strategic objectives
  • Lack of specific SRM competencies and skills
  • No alignment between the business and procurement
  • Ignorance of soft skills in managing business relationships
  • Limited engagement and sponsorship
  • Lack of mutual understanding and empathy

 

It is important for an organization to understand the value of each supplier and prioritise on the basis of same. Nature of products and services also play a key role in strategizing the supplier relationships.

Customised solutions need to be developed for managing relationships with  different sets of suppliers.

Recommended Posts: Your Supplier On-Boarding Checklist

To successfully achieve the supplier management challenges, here are some essential tips.

A properly managed supply chain can create a competitive advantage for your business. The following best practices if implemented properly creates strong competitive advantage for a firm in today’s dynamic market.

 

1) Setting Objectives Right

 
The key objective of effective supplier management is that it helps in reducing business procurement costs. The second most important objective is to ensure that there is a consistent flow of goods and services to the end consumer.
 

2) Cost Evaluation

 

supplier management best practices

 

One of the key goals of any supplier management system is to understand the costs associated with each supplier. One can analyse the cost associated with each supplier and compare it with that of other suppliers. This also helps in optimizing the cost of each supplier and  who provides the best cost.

 

3) Following A Definite Process

 
Creating definite processes for supplier management is important for managing each of the suppliers effectively. The process once defined, must be adhered by both the parties.This helps in developing a business relationship that is mutually beneficial in the long run.

 

4) Service Level Agreement

 
A service level agreement is important for a successful buyer-supplier relationship. Having just a verbal agreements can lead to higher chances of dispute or confusion later on. An SLA helps in resolving any issues that arise between a buyer and a supplier regarding cash flow or raw material. The document acts as a ready reckoner for dispute resolution, while it also acts as legal proof of the business relationship.

 

5) Information Management

 
supplier management best practices

 

The faster the flow of information between the  buyer and the supplier, the easier it will be to manage the inventory of goods and service effectively. One should ensure that all the requisite information is shared with the suppliers in a timely manner – so that they can make the deliveries according to the desired quality and standards.

 

6) Requirement Planning

 
This is essential for efficient management of suppliers. Analyzing the demand and supply of goods and services, on a regular basis helps in planning the requirement well in advance. This helps the supplier deliver the right quantity at the right time. Planning improves the overall efficiency of the procurement process. This in turn helps in improving the ROI of the overall business process.

Discover: Automate Accounts Payable And Receivable Management

 

7) Addressing Supplier Concerns

 
The concerns of each and every supplier must be addressed. The problems that your vendors are facing must be resolved. This helps in removing the bottlenecks of the system. Building cordial relationships with suppliers is helpful in effective supply chain management.

 
HOWEVER:
 
However, supply chain strategies must not only consider how to meet the immediate objectives, but also encompass the planning and management of all activities including logistics management activities. In essence, supplier management integrates supply and demand management within and across companies.

Supply chain management optimizes all the four areas i.e. plan, source, make and deliver by minimizing inventory and rapid order fulfillment. The combined effect of supply chain management takes the supply chain a step further, is vital to its success.
 

HOW ONLINE INVOICING CAN ACTUALLY MANAGE YOUR RELATIONSHIP WITH SUPPLIER?

You can easily automate the entire process of supplier management with Invoicera. Here are some kinds of solutions that Invoicera provides to help improve your business process:

Implementing best practices ensures a company’s common goal of reaching effective supplier management. Adopt supply chain best practices to improve quality and increase revenue.

 

supplier management best practices

 

Admin

Veronika Tondon is a business enthusiast with extensive experience in Invoicing & Payment Process. She has 7+ years of experience in Invoicera, the leading cloud-based invoicing solution as Invoicing Consultant. Sound knowledge in business process execution, offers end to end solutions for complete automation of business processes and AR/AP processes. Contact Veronika for your invoicing requirement.

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