The complete guide to supplier relationship management software

Today, procurement and supply chain teams are more focused on providing value than they are on avoiding costs.

Organizations usually measure the value of a product, service, or SaaS solution by calculating its total cost of ownership (TCO). Does the value of the SaaS supplier and the solution justify the price? 

Without a supplier relationship management tool, it is difficult to answer that question.

Supplier relationship management (SRM) software is a critical tool for businesses that want to improve their supplier relationships. SRM software can help companies manage their vendor base, track supplier performance, and identify areas for improvement.

Another important consideration is the features and functionality of the software. Make sure the SRM software you choose includes features that will be useful for your business, such as contract management, supplier performance tracking, and supplier risk assessment.

Supplier relationship management is a critical factor in optimizing the value of your procurement organization. With supplier relationship management software, you can decrease the total cost of SaaS ownership across your company.

This post will explain the advantages of supplier relationship management software, and the features to look for when selecting a solution.

Why SRM software is a game-changer

Supplier relationship management sounds much simpler than it is. 

SRM encompasses segmenting suppliers, creating strategies for each segment, executing the strategies, monitoring performance, and repeating these steps every year. If you're doing all of that without SRM software, you're spending too much time on this legacy process.

With SRM software, you will level up your supplier relations and put time back into your workday for other initiatives with a high return on investment, like strategic sourcing. 

When it comes to choosing SRM software, there are several factors to consider. The first is the size of your vendor base. Some SRM software is designed for small businesses with a limited number of vendors, while other software is better suited for larger organizations with a more extensive vendor base.

Here are some ways to expect supplier relationship management software to change the game completely.

Supplier onboarding

The process of supplier onboarding involves gathering data and establishing new suppliers on your billing platform. Companies without supplier relationship management tools often have full-time employees whose jobs involve collecting documents and setting up supplier connections.

Using the right software, you can simplify onboarding into one platform, and only need to provide approvals from your company. 

Supplier performance management

Without the right tools, maintaining real-time visibility of your supplier ecosystem is impossible. Instead of pursuing strategic supplier relationships, your time is spent chasing down license agreements and guessing whether suppliers are fulfilling their obligations to you. 

Supplier relationship management software alleviates that burden by efficiently tracking supplier performance. An effective solution provides the tools needed to collect supplier information and assess vendor scorecards. 

Here are some questions an SRM system will help you to answer regarding quality management:

• 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 segments or business units does the supplier fit into?
• Is the company utilizing the SaaS product in a way that achieves maximum benefit?
• Are there opportunities to improve your supplier strategy?
• Are there opportunities for cost savings?
• Are you mitigating all necessary supplier risks?

Spend management

In many cases, spend management is a module or component of supplier relationship management software. The right tools to monitor and control spending are vital to short and long-term success. 

In some companies, 80 percent of all invoices result from maverick spending. Spend management gives leaders the oversight they need to rein in rogue spending and make informed and strategic decisions about the software supply base.

Minimize waste

Shelfware, or SaaS an organization pays for but doesn't use, is quite common. Supplier management software provides real-time visibility of user and supplier complaints, helping to reduce waste and shelfware. This supplier management process escalates red flags that may result in shelving an application.

Supplier relationships

Suppliers aren't a "set it and forget it" relationship. In other words, don't set your suppliers up for use and only communicate with them when needed.

Supplier relationships can be easy to neglect when you're already too busy to manage your supplier base. However, neglecting to build stronger supplier relationships can have long-term repercussions on your business.

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. Using this software will help you to keep track of supplier communication and the details of your license agreements. You can use these organizational tools to be a strong customer and strategic partner to your key suppliers.

Less time on manual processes equals more time for strategic supplier collaboration, resulting in long-term partnerships that drive company value.

What to look for in a supplier relationship management solution

As you begin the SRM procurement process, here are some of the key features to consider:

• Prospective supplier registration
• Streamlined supplier onboarding with a supplier data library
• Strategic 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
• Mitigation of supplier risk, like a data breach
• Tracking and reporting of KPIs and other metrics

When reviewing prospective SRM solutions, don't just ask suppliers if they can do these things. Instead, provide them with your list of specifications and ask them to explain precisely how their solution provides that functionality. 

Then, ask the shortlist of prospective suppliers to demonstrate their solutions using real scenarios that apply to your procurement team.

The risks of supplier relationship management software

When it comes to supplier relationship management (SRM) software, there are a few risks that businesses need to be cognizant of in order to remain compliant. 

First, if the software isn't properly implemented, it can lead to communication breakdowns between suppliers and the company. This can impact the supplier's ability to deliver on agreed-upon deadlines and quantities, which can in turn cause delays and disruptions in company operations.

Second, if the SRM software is too complex or difficult to use, employees may not be able to take full advantage of its features. This could lead to inaccurate data being stored in the system, which could make it challenging for managers and procurement teams to make informed decisions about their supplier relationships.

Finally, if the SRM software is not kept up-to-date with the latest changes in supplier agreements and pricing, it could lead to inaccurate invoicing and pricing discrepancies. This could end up costing the company money, as well as damaging its relationship with its suppliers.

Businesses that are considering implementing SRM software should take these risks into account and make sure that they select a solution that is both effective and easy to update.

Is supplier relationship management software worth it?

Invest in a vendor management tool if your company seeks to automate and streamline supplier relationship management functions. Automating procurement processes that were previously manual will save time and energy for more important and profitable tasks. With a software tool, you’ll have increased insight that will help develop mutually beneficial relationships with your suppliers. vendor management tool. Automating procurement processes that were previously manual will save time and energy for more important and profitable tasks. With a software tool, you’ll have increased insight that will help develop mutually beneficial relationships with your suppliers.

Ultimately, the goal of using SRM software is to improve communication and collaboration between your business and its suppliers. By using SRM software, you can streamline processes, reduce costs, and build stronger supplier relationships.

Vendr is your partner in supplier relationship management.

With Vendr, you can get that full visibility into your supplier relationships that will lower your total cost of ownership.

Vendr gives you access to the largest set of SaaS purchasing data available. This unprecedented information base leverages price benchmarking data to drive software contract negotiations and ensure you get the best price possible on every SaaS solution.

Customers get granular insights into vendor performance, so you can spot areas of contract non-compliance and address them before they become a problem. Vendr proactively tracks upcoming renewals (preventing contracts from lapsing) and manages the renewal approval process with automated workflows.

Discover just how much your SaaS contracts are costing you today with our free savings analysis.