- Supplier relationship management software streamlines supplier onboarding, automates approvals, mitigates risks, provides spending controls, and enhances supplier collaboration.
- A good SRM tool will help your business minimize waste by helping to identify red-flag areas that could result in end-users moving away from a particular supplier or SaaS solution.
- Identify your organization's goals for an SRM tool, create a list of specifications, and then ask each prospective supplier to explain how their proposed solution achieves that need.
- A supplier relationship management solution is a wise choice for businesses that want to optimize their SaaS stacks and focus on profitability.
There is a common misconception that procurement and supply chain management is all about cost. Sure, cost is a driving factor. But procurement and supply chain teams today are more focused on overall value than they are on cost.
Value means a lot of different things to different people. But where leading organizations are concerned, value is often determined by assessing a total cost of ownership (TCO) for a product, service, or SaaS solution. For example, does the value of the SaaS supplier and the solution justify the price? Unfortunately, without the right processes in place, like supplier relationship management (or vendor management), the answer to that question is usually a shot in the dark.
Supplier relationship management (SRM) is one critical factor in optimizing value (and lowering TCO) to your organization and the most compelling way to do that is to utilize procurement technology like supplier relationship management software.
In this post, we'll cover the most important details on supplier relationship management software, the benefits it'll help you deliver to your company, and the must-have features to look for when SRM shopping.
Why SRM software is a game-changer
If we simply define supplier relationship management as the relationship between a buyer and supplier, it sounds like a piece of cake, right? It sounds way simpler than it is. You're segmenting suppliers into categories, creating strategies for each supplier segment, executing the strategies, and then monitoring supplier performance and end-user satisfaction throughout each year. If you're doing all of that without SRM software (and doing it well), you're spending a whole lot of time.
With SRM software, most of that extra time becomes unnecessary. The tools let you level up on your supplier relations and put time back into your days for other strategic initiatives. Here are some ways you can expect supplier relationship management software to change the game completely.
Supplier onboarding means collecting all the data your organization requires for new suppliers and setting them up in whatever purchasing and payables platform it uses. It isn't uncommon for companies without an SRM tool to have full-time positions at least partly dedicated to collecting the necessary documents and going through all the steps to get the supplier connected.
With the right SRM application, you can streamline the entire onboarding process into one platform with little involvement from your company except for the necessary approvals. As a result, nearly all of the time currently spent on supplier onboarding can be reallocated to strategic sourcing and other efforts that will move the needle on your organization's bottom line.
Supplier performance management
Without the right tools, maintaining real-time visibility of your supplier ecosystem can seem like an impossible task. Supplier relationship management software alleviates that burden by efficiently tracking supplier performance and giving you the tools needed to provide periodic supplier scorecards. Here are some questions a SRM system will help you to answer regarding your supplier base:
- Are end-users satisfied with the SaaS product?
- Is the company satisfied with the supplier's customer service, technical support, and security?
- Is the supplier satisfied with the company?
- What supplier segment does the supplier fit into?
- Is the company utilizing the SaaS product in a way that achieves maximum benefit?
- Are there opportunities to improve?
- Are there opportunities for cost savings?
Supplier risk management is also a component of a good performance management process and gives you the analytics and oversight you need to mitigate risks.
In many cases, spend management is a module or component of supplier relationship management software. The right tools to monitor and control spending, especially for SaaS stacks, are vital to an organization's short and long-term success. It may sound crazy, but it isn't uncommon to find that up to 80% of all invoices result from rogue spending. Spend management gives leaders the oversight they need to rein in rogue spending and make informed and strategic decisions.
Shelfware, or SaaS an organization pays for but doesn't use, is quite common. A SRM system can help you minimize waste, like shelfware, by providing real-time visibility of negative feedback or other issues reported by end-users or suppliers. Those things are often red flags that may result in shelving an application.
Supplier relations aren't a “set it and forget it” type of thing. In other words, don't set your suppliers up for use and then only communicate with them when something is needed. Supplier relationships can be an easy area to neglect when you're already too busy to manage your supplier base. But also one of the most detrimental.
Supplier relationship management software helps create the foundation for improving supplier relationships. Some of your suppliers should be strategic partners and are most likely very eager to fill that role. By missing out on developing strategic partnerships, you’re potentially missing out on tremendous value for your business.
Less time on manual processes equals more time for strategic supplier collaboration that results in great business decisions.
What to look for in a supplier relationship management solution
Supplier relationship management software offers a lot of value-added benefits. But to realize your organizational goals, it's essential to define some functionality an SRM tool needs. Here are some SRM must-haves:
- Prospective supplier registration
- Streamlined supplier onboarding with a supplier data repository
- Supplier segmentation
- Supplier self-service dashboard
- Spend management and contract management
- Automated workflows
- User-friendly and intuitive end-user dashboard
- Real-time end-user feedback
- Configurable email and text notifications
- 360-degree supplier performance assessments
- Seamless integration with ERP and other procurement software.
- Tracking and reporting of KPIs and other metrics
When reviewing prospective solutions, don't just ask suppliers if they can do these things. A supplier may respond, "yes, we can do that," when in reality, another third-party solution may be necessary to achieve it. Instead, provide them with your list of specifications and ask them to explain precisely how their solution provides that functionality. Then, ask your shortlist of prospective suppliers to demonstrate their solutions using real scenarios that apply to your business.
Is supplier relationship management software worth it?
If your company seeks to automate and streamline supplier relationship management functions, investing in a vendor management tool is precisely what you need. You'll find that when you begin to automate processes that were previously cumbersome and manual, you'll free up time and brainpower for initiatives that are more significant drivers of profitability and success.
Are you ready for better decisions and better profits? Then contact Vendr to find out how we can make that happen.