Today manufacturers realize their suppliers are their most valuable asset. In fact, data collected by SCM World in 2014 showed that, among more than 1,000 practitioners, three-quarters believed stronger relationships deliver high or very high value for their companies and 84 percent reported that strategic supplier engagement is important or very important in driving competitive advantage.
Collaborative and strong working relationships can deliver substantial benefits for manufacturers and suppliers alike in the current competitive environment. Research studies show a direct link between the quality of supplier relations and customer profitability, with average annual benefits of collaboration worth $300 million among the best-performing companies. Gone are the days of hitting suppliers with unduly harsh fines and deductions, erasing their profit margins. Rather, the goal is cultivating a more harmonious and long-term partnership.
There are many reasons for this change in approach; a reduced supplier base, faster product development and commercialization timelines, diminished internal resources and increased demand for innovative products by customers are all contributors to the need for a collaborative approach.
Companies that successfully implement strong supplier relationship management (SRM) programs have realized real dollar value return on investment. Below are ways technology can help companies achieve a strong ROI with their SRM programs.
1. Improve day-to-day communications with suppliers. Technology can dramatically reduce the cost and time associated with manual SRM management. Supplier documentation, certificate collection, and collaborative tracking processes can all be labor intensive and time consuming tasks without automation. A web-based, searchable and centralized data repository platform can streamline and track discussions among supply chain members.
2. Enhance document management. A document management portal allows the ability to upload and share documents with suppliers. The portal also allows for document version control and systems to measure activity through electronic receipts and other acknowledgements, ensuring that suppliers have accessed the correct document.
3. Centralize accountability through issue assignments and notifications. An exception-based workflow, time and action calendaring system allow users to monitor and update their current responsibilities. Since this information is centralized in one platform, the time it takes to manage workflows is reduced.
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