Till now we discussed the growing significance of supplier management and the internal factors driving the supplier management technology.

In this blog we will discuss the external factors necessitating supplier management technology.

• Industry trends

Technology is constantly evolving and organizations need to adapt to these changes. If the majority of competitors are implementing tools to manage suppliers, then the organization needs to consider it too, lest they be left behind.

• Global supply chain 

To take advantage of the cost difference in developing economies, many organizations often source from these countries, thus extending the supplier base.

• Supply chain risk

When the supply chain is spread across the globe and has tiers of suppliers, the supply chain becomes more vulnerable to macro-economic scenarios and geo-political issues,  and the probability of suppliers being caught in a scandal or a supplier’s factory being affected increases.

• Support during adverse times

When an organization has managed to maintain good relations with the suppliers, they can expect support in times of disaster (when their inventory has been destroyed, for instance) or enjoy preference over their competitors when for instance, the demand for their product soars.

• Industry standards

There are company-wide policies and then there are government regulations, such as FDA, Occupational Safety and Health Act etc., that organizations must ensure their suppliers are following and have the mandatory certifications.

In the next blog we will talk about one of the biggest obstacle that impedes the supplier management technology success – low user adoption rate.