Automate Your Supplier Management Processes for Better Financial Performance
More organizations need to start viewing supplier management with criticality to make a direct impact on the financial strategy. Enhancing supplier management features in the top 5 financial planning priorities of companies, according to a 2017 Ardent Partners report.
Supplier management is no longer restricted to just managing a large database of suppliers and daily communications with them – it also encompasses knowing them better and making them important partners in all business operations. This includes planning around compliant supplier on-boarding processes, transparent and accountable performance metrics, and robust risk management and so on.
Automating your organization’s AP processes by implication means smoother and consistent interfacing with suppliers who have no choice but to be compliant and perform well, or be replaced by better performing alternatives.
The need for a shift in supplier management strategy starts with the most important spoke in the wheel – supplier information management. A large chunk of companies still collate supplier data in disparate spread sheets leading to data duplication and misplacement and in turn leading to on-boarding incompetent suppliers. If your organization is unlucky, some of those might also be fraudulent and non-compliant, exposing you to serious supply chain risk.
Factors Driving Supplier Management Automation:
1) Shift in Management Focus
Due to cut-throat competition, organizations’ top management have realized they need to automate operational tasks in order to focus on more strategic ones.
2) Organizational Growth
A growing organization means an exploding supplier base. With problems coming from suppliers increasing more and more, the need for automation is higher than ever.
3) Supplier Information Growth
Manual verification and storage leads to increased paper work and errors emerging from it. There is also a growing concern about data confidentiality.
4) Strategic Supplier-Buyer Relationships
You are hampering your supplier relationships every time there are untimely payments, missed discounts and repetitive follow-ups.
5) Industry Technology Landscape
Peer organizations are feeling the heat of what best in class organizations are capable of and want to reap the same benefits from automation. This starts with developing a culture of continuous evolution and innovation.
With changing times, the attention has now shifted to an automated, centralized and strategic process connecting Accounts Payable, Procurement, Legal, Finance and Admin to ensure you are getting your money’s worth from suppliers. With the rise of a cradle-to-grave technology for managing suppliers called ‘Supplier Lifecycle Management’, it is possible to understand their influence on the enterprise spends.
Supplier Lifecycle Management:
SLM has 8 unique components:
1) Supplier Qualification
2) Supplier Evaluation
3) Supplier Selection
4) Supplier On-boarding
5) Supplier Performance Management
6) Supplier Risk Management
7) Supplier Development
8) Supplier Relationship Management
A supplier management information repository lies at the foundation of SLM. It is the source for collating performance and risk details for all suppliers. Supplier Management Automation results in strategic long term benefits for both suppliers and buyers.
Some main processes where automation adds value in eliminating error, improving data visibility and increasing process efficiencies are:
1) Category and Item Analysis
2) Supplier Analysis
3) Spend Analysis
4) Discounting Opportunities
Read our White Paper titled ‘Supplier Management Automation’ for a more detailed discussion on the specific business cases of supplier management automation.