Principles of Successful Supplier Relationship Management
A Shifting Landscape is Changing Supplier Relationships
The past year underscored the impact and the importance of supply chains more than ever. For manufacturers and distributors, the criticality of a robust and flexible supply chain cannot be understated. Supply chains are dynamic—shifting forces raise new concerns, and what was a given yesterday could be a curveball tomorrow. Many of these things, in the broad context of the global supply chain, are outside of our control. That said, even with the variables that come from an evolving climate such as the current day, there are still many things we can control—things that we can do to better manage our specific supply chains.
New Supply Chain Challenges Require Adaptive Tools and Processes
Developing tight supplier relationships is key to managing changes in lead time, delivery, prices, and products.
Change and Opportunity
For many companies, managing the manageable comes through a tighter integration with suppliers. And in many cases, this is accomplished through collaboration platforms such as SourceDay. Portal-based integrations allow customers to work with their suppliers to manage purchase order requests, acknowledgements, expedite requests, exception handling, changes, and the variety of related processes and tools that come with supplier relationship management (SRM) systems. In working with our Epicor ERP and Prophet 21 customers, we’ve seen several principles embodied through the use of such platforms.
Automation
In manufacturing and distribution environments, Automation is often thought of as an improvement inefficiency. Automation in supply chains goes well beyond the simple idea of efficiency. Automation is fundamental to a portal platform like SourceDay, as it provides the bedrock for supply chain effectiveness and its related principles. For example, moving the process of acknowledging a PO from a collection of emails, text messages, and phone calls into a single point of contact builds the foundation for everything that follows: visibility, measurement, collaboration, etc.
Visibility
Fundamental to the successful execution of a supply chain is the visibility of supply and demand between customer and supplier. Changes to global supply chains cascade changes onto suppliers, and concomitantly, their customer base. Lead times, lot sizes, pricing—all can be affected, and keeping these changes organized and updated in your ERP system begins with a customer’s clear “line-of-site” to their supplier’s reality as it evolves. Good data is fundamental to the function of a business system, as it drives all the behaviors of the system, and of the related users. This can be an either-or:
- Is your data up to date and accurate such that you are making reasonable requests to your supplier?
- Is the data in your system sending your buyers on supply missions that are doomed to fail?
Companies that can leverage the real-time feedback from suppliers are best equipped to make the act of acquisition a successful endeavor.
Collaboration
The value of a reciprocal relationship between customers and suppliers cannot be underestimated. Beyond the benefits already stated, visibility is fundamental to the development of a successful partnership with your suppliers. The creation of a clear communication pipeline between customers and suppliers allows for more collaborative options, including the ability to quickly adjust dates, shift demand patterns, manage pricing and course-correct, all early in the buying cycle, while options are still available.
KPIs and Metrics
Metrics are key to accountability; you cannot fix what you cannot measure. Can you quantify your suppliers on time delivery performance? Or do you need to perform an extraction from your ERP system, massage the data, such that it can be presented to the organization? Just as metrics are key to accountability, automation is key to developing consistent and timely metrics. For instance, the automation of the process of tabulating plan-vs-actual data without human intervention makes real-time visibility and measurement a reality.
But what are the metrics you need to successfully manage your supply chain? Supplier delivery performance is an obvious choice. What about acknowledgement rates? Are your suppliers doing a good job of acknowledging your purchase orders? Can you quantify this? Supply chain researchers have found that acknowledgement rates strongly correlate with on-time delivery performance. Thus, a company can view a supplier’s acknowledgement score as a leading indicator of their ultimate delivery performance. As such, when you bring in a new supplier, you should have the tools to quickly assess how well they are acknowledging their POs, even before shipments arrive.
Putting the Pieces Together for Wholesome Supplier Relationships
As companies implement and optimize their ERP investments, the search to better fine tune and extend their systems becomes the next priority. We’ve found that the extension of the supply chain thought vendor portals such as SourceDay to be one key way that companies maximize their ERP investments and optimize their internal and external business processes.
Are you in search of the next step to your ERP implementation? Come to our most excellent session with SourceDay on “Bridging the Gap Between Epicor and Suppliers for Distribution Companies” and learn how their solution can help you with supplier relationships.
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