How can you bring supplier relationships into the future with digital procurement?
Summary
In the contemporary business environment, digital procurement is becoming increasingly popular and sought after by businesses around the world.
The relationships between buyers and suppliers are one of the key components of the procurement process that needs to be digitalised to create lasting relationships and enjoy better opportunities.
Using digitalisation to streamline the onboarding process for suppliers creates a faster and more accurate way of updating supplier information.
Regular updating of the supplier information entered into the system is important to manage the data security of suppliers and prevent any errors or fraudulent activities from taking place.
Procurement digitalisation can simplify the interaction between suppliers and buyers by fostering better relationships.
Digitalisation has become a common occurrence in our supply chains with more than 85% of purchase orders being sent via email or online. At the heart of this are the suppliers who play an important role in the supply chain.
Since suppliers are an essential component of the procurement function, managing these relationships in the digital age is vital. Emerging technologies are making this much easier as they enable businesses to establish and maintain a strong pool of suppliers.
Being actively involved in the development of new product supply chains, especially complex supply chains, costly components, and time-consuming elements, is crucial to maintaining positive and productive relationships with suppliers.
Organisations that execute these relationships well are likely to see more streamlined production and improved supply chains, which is why bringing suppliers into the future of digital procurement is crucial.
Streamline the onboarding process for suppliers
Onboarding suppliers is an important process involving finding, qualifying, approving, and adopting suppliers that are right for the organisation.
Many organisations are still using manual processes on paper-based application forms which can be laborious and time-consuming. The majority of the time, business users and suppliers are left frustrated by the trail of paperwork that needs to be processed before continuing in the process, leading to delays and missed opportunities.
Contemporary businesses are implementing automated ‘supplier self-management’ processes where suppliers have the freedom to log in to the system and enter their information during onboarding.
These businesses can then use online forms to capture the supplier’s information quickly and use internal workflows to validate the supplier’s requests.
Manage data security of suppliers
Once you have onboarded a supplier, it is important to make sure that their information is regularly updated and maintained.
For instance, if a supplier’s payment is being processed and mailed to them but the payment gets returned due to the supplier changing the address, it creates a stressful situation for both the organisation and the supplier.
The same could happen if the supplier’s bank details have changed and a bank transfer has failed. There are even incidents where organisations have been victims of fraudulent activity because they do not have the proper controls in place to ensure that supplier data is protected and accurate.
Incidents similar to these occur more regularly and cost organisations on both a financial level and a resource level. Most payment errors occur due to inaccurate or outdated supplier data and can lead to diminished supplier relationships where organisations may even lose out on possible opportunities.
Suppliers—or at least preferred suppliers—should be able to update their profiles and information as needed, giving your employees more time and resources for other important tasks. Automated alerts can also give suppliers crucial reminders about the status of their supplier contracts and compliance certifications that require periodical renewals.
Bringing suppliers into the world of digital procurement can help validate data, have internal controls, and minimise the risk of error or fraud.
Simplify the interaction between suppliers and buyers
Once supplier relationships have been, built it is important to nurture these relationships into the next stage of the supplier-buyer relationship and extend it to various areas of the Procure-to-Pay (P2P) process.
Organisations can benefit from financial savings in the event they require preferred products as their preferred suppliers will be able to provide them with the material they need for better prices.
Leading organisations are creating platforms where all products and suppliers can be viewed on a single screen, giving them the ability to create requisitions with pre-determined products from their preferred suppliers.
Using digital procurement tools, manual and time-consuming tasks have been fast-tracked, including:
- Supplier catalogue integration: Automatic integration of the supplier’s product catalogue with the procurement process
- Developing invoices: Ability to extract information from a PO and automatically create an invoice
Digital procurement—bringing supplier relationships into the future of procurement
The digital age for procurement has arrived and many organisations have seen the benefits that it can offer. By making significant changes and adapting to this new world, businesses are saving significant time and enhancing their cost savings.
Supplier relationship management is only one of the many areas that are impacted by this procurement transformation.
Processes that have worked in the past are becoming obsolete and it is important to mitigate these procurement risks and digitalise businesses faster to enjoy its benefits.
