Having a strong, well-defined set of processes in procurement is like having a lifeboat in a storm. It makes the difference between being prepared and having confidence that you can withstand any ‘bad weather’ or working in fear of the consequences of ill-preparedness when such times come about.
Building the process is the first step – enforcing the process is arguably the more important second. Having your team on the same page regarding the parts they play in the process is key to its success, and the same logic applies to the suppliers your team engages with. Greater levels of understanding foster deeper and more successful relationships, which can only benefit your bottom line.
Well-defined does not mean definitive, however. Allowing for change is important and having processes which can adapt when necessary is paramount.
Define and adjust your process, and stick to it.
- 2. Make Use of the Tools at Your Disposal
Technology is a wonderful thing, used correctly. There are no shortages of software options to choose from, all claiming to help your procurement, supply chain, and supplier relationship management activities in a myriad of different ways. Choosing the correct software tool which you believe will actually positively affect your process is key.
As part of your (hopefully robust) processes, a good software tool can support and enhance those processes, making them easier and more enjoyable to follow, and giving you faster returns on work put in.
A tool which can be configured to match your specialised requirements, which is secure, and can take the guesswork out of supplier risk and performance, is an absolute business essential.
- 3. Set Clear Expectations
This is a crucial step to positive relationship management when engaging with suppliers. Contract negotiations, complaints, or any similar interaction benefits from clear communications of expectations and needs.
It is also essential to have accurate supplier data in order to have informed opinions on the best proceedings. With detailed data logs of supplier performance, understanding of the current situation and negotiation for the future becomes easier.
Should suppliers fail to meet expectations, it is vital to approach the situation sensitively and professionally. With the proper channels in place to escalate issues when necessary, you can have confidence in your approach, and be assured that relevant stakeholders are kept informed automatically.
- 4. Evaluate & Mitigate Risks
Engaging with suppliers means engaging with some level of risk. Having a working system to track and monitor supplier compliance will help you to mitigate that risk by completing necessary due diligence.
Being able to have confidence in the trustworthiness of your suppliers, as they have been validated through due diligence or external accreditation, will help you to build stronger supplier relationships. Trust is key, and being able to prove supplier compliance cultivates trust.
By streamlining the collection of information from suppliers, you can make this process more efficient. Removing the stress of maintaining supplier compliance this way can give you the peace of mind and clarity to more effectively handle other aspects of supplier relationship management, such as contract negotiation.
- 5. Monitor Performance
Lastly, there is the ongoing monitoring of supplier performance. This element of strong supplier relationship building is prevalent within every other aspect of SRM, and it is crucial to fostering understanding and driving informed decisions.
Identifying the standards you need suppliers to meet as your benchmark for performance is crucial – then there is the action of holding suppliers accountable. This should be discussed early on in the relationship, as well as ratified in contract.
With this understanding, you can use supplier data to your advantage in order to consistently measure, and therefore manage, supplier performance. Understanding when a supplier is meeting expectations versus not meeting them is an important part of supplier relationship management, and it can only be done with a complete picture of the supplier in question.
Supplier relationship management is a multi-faceted concept, and each element is important to creating a strong whole. The right tools, like software, can help to streamline the process of maintaining and evaluating supplier relationships, making it more efficient and therefore easier to do.