Each company dedicates great efforts and resources to improve its operation and guarantee its competitiveness in the market. Part of these efforts have to do with supplier management , a vital alliance that requires special attention and care.
For this, the Supplier Relationship Management (SRM) systems are a good support, since they represent the best way to optimize the relationship of the company with its allies.
The main objective of SRMs is to improve the organization’s purchasing and sourcing management. This is achieved through an action plan that covers all aspects of the relationship with suppliers.
Phases and processes in supplier management
Good supplier management allows you to achieve the best quality at the best price with respect to the products and services on which the company depends. This is possible by defining an appropriate strategy to select the suppliers that best suit the needs of the company.
In this sense, the SRM comprises the following phases to define the route to follow:
- Analyze the supplier base that the company currently has.
- Manage the direct relationship between supplier and company (contracts, orders, agreements, among others).
- Define collection and dispatch agreements and conditions, guaranteeing maximum profitability for the business.
- Back up and update all the data regarding supplier-company relationships, so that it is available at any time.
In turn, within the SRM framework, a series of processes are implemented in order to design the appropriate strategy to optimize the commercial operation of the organization. Among them are:
- Classify providers . This is achieved through a comparative analysis of the price-quality ratio offered by the local and international market. What we will do is segment them .
- Understand the offer of suppliers. It is necessary to carry out a thorough analysis, which identifies the characteristics of what each provider offers. This is known as evaluation
- Guarantee the quality of the products purchased, as well as the fluidity of payments and deliveries . Here, it is essential to maintain continuous monitoring of quality controls, as well as direct communications with suppliers. This is possible through proper planning .
- Keep the board informed of all the operations carried out . It is necessary to continually update all supporting data regarding supplier relationships so that management is aware of the business operation of the company.
Conditions for Success in Supplier Relationship Management
To ensure successful supplier management, we advise taking into account a number of key factors:
- Guarantee supplier-client independence. This ensures a high level of trust that allows the fluidity of commercial relations.
- Apply a permanent quality control. This requires mutual cooperation between both parties.
- Establish all necessary agreements under a legal contract. Quality, price, delivery dates, as well as dispatch, delivery and payment systems and procedures must be agreed upon in advance.
- Both the supplier and the company must ensure that they monitor all phases of their internal processes, maintaining fluid and friendly communication to ensure the success of operations.
Supplier control plan as part of the SRM
In the supplier control plan, both internal and external factors must be taken into account; On the one hand, the activities carried out internally in the company to guarantee the quality of the products purchased. On the other hand, a benchmark will be carried out to know and analyze the providers available in the market and the characteristics of what they offer.
Some of the data collected by the supplier control plan are:
- Need to purchase raw materials, products and / or services : the plan must determine the real needs of the company to subsequently determine the pertinent specifications to the supplier on the characteristics that the necessary material must meet.
- Purchase specifications : included in a series of technical documents that contain all the specifications of the product to be purchased.
- Initial evaluation of suppliers : it is necessary to draw up a list of the suppliers available in the market, to determine which are the most suitable. For this, it is necessary to collect all the information from each supplier, creating personalized profiles adapted to the financial and quality criteria of the company.
- Control and purchase of the products purchased : Each product purchased must go through a comprehensive quality control process. If any product does not comply with the pre-established agreements, it will be returned, pending due compensation.
- Incidents : Any detail that violates the agreements established in the purchase specifications must be reported in a timely manner. Returns, reprocessing and isolation of merchandise not suitable for sale will appear in the incident report.
The most popular SRM software on the market
Vendor management involves a series of processes that can be optimized with automation. This is possible through Enterprise Resource Planning (ERP) systems, which usually have SRM modules.
Some of these most popular systems on the market are:
Vendor Link : SRM system developed by Manthan and whose focus is to provide absolute agility to both suppliers and customers. This is possible thanks to its modules collaboration processes and data collaboration .
SAP SRM : SAP is recognized by IDC MarketScape as the world leader in ERP services. The SAP SRM solution meets functionalities such as:
- Optimization of purchase to payment
- Catalog management
- Self-service shopping
- Planned purchases
- Purchase of services for large complex services
- Operational and centralized supply
- Centralized contract management
- Operational reports
Oracle ERP cloud : this Oracle platform provides the following business management solutions from the cloud:
- “Enterprise Performance Management”
- Supply chain
- Risk management
- Project portfolio management
Sage ERP : it is a business management application whose resources are adapted to both the needs and the size of each company.
Infor : Its Infor M3 solution is an ERP specially designed for manufacturers and distributors, while its Infor LN solution is a cloud ERP oriented to complex and industrial manufacturing companies.
Microsoft Dynamics 365 : Microsoft ERP aimed at meeting various business needs, unifying and automating processes. Although SAP still dominates the global ERP market, Dynamics 365 is beginning to gain ground, climbing to the second rung among the most used applications, according to Panorama Consulting Solutions .
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