- In the post-pandemic era, adequate vendor management services and an ideal supplier management software are needs of the hour.
- Supplier management software offers a ton of benefits, like improving the supplier onboarding process, enhancing supplier collaboration, mitigating supplier risks, streamlining performance management, and controlling spend management.
- A supplier self-service portal, 360-degree performance, corrective actions, risk management, real-time collaboration, spend analysis, paperless processing, and seamless integration are some of the most indispensable features in a supplier management software.
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Every business has a vast network of suppliers. And it is critical to manage every one of them properly. Supplier management is much more than onboarding a new supplier and communicating with them when there is a need.
Proper supplier management can optimize spend, mitigate supplier risks, and help create win-win partnerships that contribute to the bottom line. However, managing supplier relationships manually is not only cumbersome but also time-consuming. Manual supplier relationship management (SRM) is riddled with paperwork, human errors, and data redundancy.
Whenever supplier information and other critical elements are maintained using outdated tools like spreadsheets, the available data quickly becomes stale. On top of that, manual workflows are inconsistent and inaccurate. What's more, stakeholders spend a lot of time chasing after suppliers for information and updates.
Supplier management automation has proven to be efficient and effective in solving supplier-related challenges in the procurement process. The astounding growth of the global supplier management software market is proof of that. It is expected to grow exponentially and reach $11.5 billion by 2027.
If you’re new to the concept of digital transformation in supplier management, don't be afraid. We’ve got your back. In this post, we’ll explain supplier management, the benefits of implementing supplier management software, features to look for in an ideal supplier management software, and top supplier management solution contenders.
What is supplier management software?
Supplier management software refers to software solutions that automate every step of the supplier lifecycle, from onboarding to supplier performance management and offboarding. The right supplier management software can increase supplier participation, streamline spend management, simplify supplier data management, and mitigate supply chain risks.
Benefits of supplier management automation
A supplier management system has its own set of capabilities that streamline and simplify day-to-day supplier management operations. If done right, supplier management automation can offer a ton of benefits. Listed below are five major benefits that you can enjoy by implementing good supplier management software.
1. Improve supplier onboarding process
Manual supplier onboarding is such a hassle. Procurement managers end up spending most of their time chasing after purchasers and supplier contacts to complete the onboarding documentation.
A supplier management system will eliminate the need for manual follow-ups and establish automated workflows to facilitate document collection and enrollment. What's more, when there is a self-service supplier portal, suppliers can keep their data up-to-date without seeking help from the procurement team.
2. Enhance supplier collaboration
In a manual supplier management environment, collaboration is always a challenge. If your supplier has not alloted a key account manager for your account, you will be left at the mercy of their customer support team. In both cases, you may have to wait at least 24 hours for a proper response from the supplier's team.
The collaboration happens in real time with a supplier management solution, as most platforms have built-in chat functionality. In addition to facilitating communication, some platforms provide a marketplace for suppliers and buyers.
3. Mitigate supplier risks
Supplier risk management is a necessary evil. In a world where even reputed software providers are at risk of having multi-day outages, it is critical to keep a close watch on your supplier's compliance and risk environment.
If you don't have a dedicated vendor risk management software, then a vendor management system (VMS) is a good place to start. Today, most supplier management systems come with a risk management module that takes care of supplier risk assessments and offers pre-built questionnaires to perform necessary due diligence.
4. Streamline performance management
There's much more to supplier performance management than merely keeping (service level agreements (SLAs) in line. Supplier performance management is the process of tracking, measuring, and analyzing an external supplier's performance at regular intervals.
Manual performance management is subject to bias and favoritism. Automation streamlines the end-to-end process, keeps it free from bias, and helps make insightful decisions. Additionally, supplier scorecards capture both qualitative and quantitative vendor performance metrics. Insights acquired through performance management help identify and weed out underperforming suppliers, thus facilitating quality management.
5. Control spend management
Manual spend management is fraught with characteristics that foster maverick spend. These characteristics include poor spend visibility, incomplete supplier data, vague specifications, and more.
Vendor management software helps you spot redundant purchases and overspending but also prepare ahead for SaaS renewals so that you can negotiate a better deal.
Features to look for in a supplier management solution
Freely available product ratings and comparisons are often generic and vague. Making purchase decisions based on incomplete data can lead to undesirable complications. To make the right decision, businesses need to cross-check whether their desired supplier management solution comes with the right set of features.
Listed below are some indispensable features that an ideal supplier management software must have.
1. Supplier self-service
This functionality empowers suppliers to manage their profiles, update catalogs, complete risk assessments, and track payments without getting in touch with the procurement team.
2. 360-degree performance
Most supplier management platforms come with an intuitive dashboard that offers a bird's eye view of vendor performance data like SLA adherence, contractual compliance, and more.
3. Corrective actions
Top supplier management solutions have a SCAR module that initiates a supplier corrective action plan every time a supplier’s performance slips up. Some solutions even offer the feature to offboard an underperforming supplier directly.
4. Risk management
The power of dynamic rules-based workflows enables businesses to streamline their risk management process by ensuring policy, regulatory, and legal compliance. Some supplier management software helps to retrieve and verify supplier information like business reports, financial data, security certifications, and credit risk using the supplier's unique identification like a D-U-N-S number.
5. Real-time collaboration
Instant collaboration functionalities help businesses collaborate with their suppliers across geographies in real time to communicate feature requests, to notify about a bug in the SaaS tool, and more.
6. Spend analysis
The spend analysis feature can help capture all spend categories (across suppliers, departments, and more) with automated notifications, handy dashboards, and configurable reports for informed decision-making.
7. Paperless processing
Supplier management processes are always a lot of paperwork. Automated supplier management solutions offer a centralized database to store all procurement documents from RFPs to invoices.
8. Seamless integration
Businesses that implement supplier management software can improve their end-to-end procurement process's speed, productivity, and performance from requisitioning to invoicing by effortlessly integrating with ERP, accounting systems, and more.
Kickstart your supplier management automation journey
Post-pandemic, businesses realize the need to offer better vendor management services. Supplier management software helps businesses extract more value from a supplier relationship while reducing risks and paving the way for continuous improvement.
Make sure that your chosen supplier management software consists of the eight indispensable features outlined above. Supplier management tools help businesses implement their supplier management strategy quickly.
Want to streamline your SaaS buying and renewals too? Get in touch with Vendr to learn how our SaaS procurement services can help.